The recent tug-of-war over the stablecoin policy is becoming more and more interesting. Trump camp's crypto advisor Patrick Witt directly called out the banking industry, saying that if they continue to oppose the CLARITY bill forcefully, they will end up suffering big losses.

The background is like this. Banks see that stablecoins can give users over 5% returns and are getting anxious. They worry this will drain all their deposits, so they collectively oppose the CLARITY bill. Christopher Williston, president of the Texas Independent Bankers Association, even warned that compromising on this bill is equivalent to compromising local loans and economic productivity.

But Witt's view is completely opposite. He believes that the banks are engaging in a suicidal strategy. If they truly believe that funds will flow out, then restricting stablecoin rewards would be even worse. He used a vivid metaphor, saying banks are like arsonists threatening to burn their own house down.

Even more interestingly, the GENIUS Act passed last year already allows stablecoins to pay rewards through exchanges and DeFi protocols. So even if banks back down now, these reward mechanisms will continue as usual. The White House is now pushing the CLARITY bill, and the real goal is actually to use stablecoins to help the U.S. Treasury. According to recent research, stablecoins have become the marginal buyers of U.S. Treasury bonds, purchasing $153 billion worth of U.S. Treasuries by the end of last year, making them the third-largest buyer.

Moreover, stablecoins can sometimes lower Treasury yields by over 3.5 basis points. This is a significant help for the Treasury Department. If the current opposition from banks leads to restrictions on stablecoin rewards, it could slow down the entire industry and disrupt the White House’s long-term strategy.

Interestingly, despite the bill currently being at a standstill, the market still expects a 71% chance of passing it this year. It seems investors still believe the White House will push this forward. After all, the demand for financing U.S. Treasuries is there, and stablecoins have already become an unstoppable force. Can banks hold it back? Probably very difficult.