Trump backs crypto in a fight with banks over yield
President Trump publicly sided with the cryptocurrency industry this week in a deepening dispute with the US banking lobby over whether stablecoin issuers should be allowed to pay yield to holders, a fight that had threatened to stall passage of the broader CLARITY Act and that determines whether tens of millions of dollar-stablecoin holders can earn interest on their balances.
The mechanics are technical but the stakes are not. Regulated stablecoin issuers like Circle hold customer dollars in short-term Treasuries and money market instruments, which generate around five percent in annual yield. Banks argue that allowing the issuers to pass that yield through to holders turns stablecoins into a direct competitor to checking and savings accounts, drains deposits from the regulated banking system, and undermines the regulatory bargain that gives banks privileged access to the Federal Reserve in exchange for funding the economy through loans. The crypto industry counters that the prohibition is purely protectionist, and that consumers, not banks, should capture the yield generated by their own dollars.
Trump's intervention has shifted the legislative momentum decisively. With the President now on record opposing the bank-favored carve-out, the version of the CLARITY Act expected to reach the Senate floor before the July 18 stablecoin implementation deadline is likely to permit yield-bearing stablecoins under a regulated framework, with disclosure and reserve requirements but no outright ban. Several issuers, including Tether and a handful of new entrants, have signaled they will launch yield-sharing products immediately if the carve-out fails.
For ordinary holders the change matters in dollar terms. A stablecoin holder with ten thousand dollars in idle balance today earns nothing on it. Under a yield-bearing framework, that same balance would generate three to four percent annually, transferring tens of billions of dollars from bank profit margins to retail wallets over the next decade. The fight is essentially a referendum on who gets to keep the interest on America's digital dollars.
