White House advances Clarity Act to close crypto tax loophole on stablecoin yields

The White House brokered a compromise on the Clarity Act, addressing banks' demand to eliminate a stablecoin yield loophole that diverts deposits from traditional lending.

Negotiators finalized terms allowing the bill's progression after closed-door sessions between crypto firms and banking representatives. The agreement permits stablecoin issuers limited incentives while mandating reporting to capture unreported gains.

Crypto executives, including those from Coinbase and Ripple, endorsed the framework alongside trade groups. Banks secured closure of provisions enabling yield-bearing products that compete with insured deposits.

The Clarity Act establishes CFTC oversight for digital commodities and spot markets. It resolves jurisdictional overlaps between the SEC and CFTC, providing registration regimes for exchanges and brokers.

Current law bars stablecoin issuers from paying interest, creating a gap exploited by intermediaries offering rewards. The bill requires disclosure of such mechanisms to the IRS, projected to generate billions in recovered taxes.

President Trump urged swift Senate passage, criticizing banking lobby delays. The measure passed the House last summer but stalled amid yield disputes.

Industry leaders view the deal as essential for regulatory stability. Blockchain Association representatives confirmed concessions balanced innovation with financial safeguards.

Implementation includes technology-neutral rules for tokenized assets. Banking regulators plan public comments on GENIUS Act integration for stablecoins.

The compromise unlocks stalled market structure reforms. Crypto firms anticipate accelerated product launches under defined boundaries.

Tax changes align staking and mining rewards with realization upon sale. Small transactions below $300 gain exemptions, easing retail barriers.

White House digital asset council recommendations emphasize embedding crypto in mortgages and retirement products. The push positions the US as a global leader.

Supporters project trillions in tokenized securities by 2030. NYSE and others prepare platforms compliant with forthcoming standards.

The development follows executive orders prioritizing crypto capital status. Final markup targets late spring ahead of recess.