There was a bigger story behind the battle over stablecoin rewards in the CLARITY Act: a fight over who will control the underlying infrastructure of digital finance as tokenization moves rapidly from experiment to broad adoption. Tokenization is forcing a battle over whether this new financial system will be built primarily on private networks controlled by financial institutions, with central banks and regulators at the center, or on public networks, similar to the internet, that no financial institution owns and that anyone can build on. Many people don’t realize how systematic this battle between old and new has been, or how long it has been underway. As far back as 2021, the @baselcommittee effectively required banks to hold capital equal to 100% of their exposure to cryptoassets like BTC. That rule wasn’t designed to benefit banks - banks and their regulators frequently have competing interests - but its effect was to create a regulatory wall between the banking system and assets operating on open networks. Then, in 2024, the @BIS_org joined with seven central banks and dozens of the world’s largest banks and other financial institutions in Project Agorá to build an alternative tokenized payments system around commercial bank deposits and central bank money - essentially recreating the existing banking architecture on new technology rather than moving payments onto open networks. The common thread isn’t that banks and their regulators always agree. They don’t. And banks themselves increasingly experiment with public networks. But the core economics of banking - and the regulatory perimeter within which those economics operate - remain rooted in an institutionally controlled system. Banks and their regulators may have different interests within that system, but both have powerful reasons to resist financial activity migrating outside it to public networks that no institution controls. The stablecoin rewards fight was another chapter in this larger battle. Big banks sought restrictions on rewards that would make stablecoins less attractive as an alternative payments infrastructure. They activated community banks with warnings that rewards would cause massive deposit flight, despite never producing evidence for that claim. But the banking campaign was much bigger than rewards. The banks worked to peel away support for CLARITY among lawmakers in both parties, contributing to delays and ultimately the death of legislation that would have provided statutory protection for developers and decentralized financial applications operating outside bank-controlled payment rails. The Trump administration has embraced a very different approach to tokenization, competition and disruptive technologies. From its first days, the Trump Administration made it explicit U.S. policy to protect Americans’ ability to use open public blockchain networks, develop and deploy software, transact peer-to-peer and maintain self-custody - and to support innovation on permissionless blockchains. The President’s Digital Assets Working Group went further, calling on policymakers to embrace DeFi and describing the movement behind crypto as one dedicated to building a more open and efficient financial system. The administration has been putting that commitment into practice, using regulatory authority to enable more financial activity to move onchain and reducing regulatory barriers to the development of decentralized financial infrastructure. These regulatory steps don’t replace legislation. But the Trump administration deserves enormous credit for understanding what is ultimately at stake: not simply whether finance becomes tokenized, but what kind of financial architecture America will build. Finance will be tokenized. The question is what we tokenize onto: open infrastructure that anyone can build on, or a digital version of today’s system controlled by the institutions that dominate it. That is the fight.

The frictions and delays in the financial system create unnecessary costs that ultimately benefit only the intermediaries. Kudos to @ChairmanSelig for focusing on making our markets more efficient and resilient - and more accessible to the public.

The Trump admin is weighing a policy of promoting stablecoin adoption. All you have to do is look at bond yields to see why. The bank lobby is going to fight this because they fight every kind of progress that erodes their unjustified and underserved monopoly. When they do, it will reveal their true colors. A stablecoin is always (always!) easier to acquire than a bank account. It's also more functional. Once more assets go on chain, it will be more interoperable too. All else equal, there will always be more demand for stables abroad than dollar accounts. Banks arguing against such a policy are arguing for lower dollar demand, higher borrowing costs for the US government, higher mortgage rates, etc.

The underreported story of crypto’s growing political voice is its emergence as a major grassroots voting constituency. Nearly 70 million Americans own crypto. @standwithcrypto has more than 3 million U.S. advocates, who generated 1 million calls and emails to Senators in support of CLARITY. That wasn’t enough to overcome partisanship and powerful entrenched interests this time. But these advocates are voters—and the CLARITY vote gave them another reason to turnout in November.

The notion that an individual, non politician, “killed” Clarity with a tweet is patently absurd. For starters, if you believe this, you believe our entire political process is broken. You are also a sucker. Why? Because when @brian_armstrong tweeted “no bill is better than a bad bill,” ethics had not even been discussed. And ultimately the ethics clause and politics killed the bill. There was not path to success with the politicization of the bill.

All of us in the crypto community owe a massive debt of gratitude to @SenatorTimScott, @JohnBoozman, @SenLummis and @berniemoreno for the extraordinary work they put into CLARITY. They spent countless hours working through extraordinarily difficult issues, listening to stakeholders and colleagues across the aisle, and pushing relentlessly for clear rules that protect consumers while keeping innovation and the future of finance in America. The vote this week was disappointing. But their work was not wasted. They moved the debate enormously and laid the groundwork for the durable market structure the United States still needs. Big thanks to each of them for their leadership, persistence and commitment to getting this right.

This is not a race to announce the most pilots or write the most permissive rules. It is a long-term competition to build markets that are trusted, open and interoperable, and protections that can travel with assets across networks and borders. It's gratifying to see the regulators stepping up this week to ensure that the U.S. leads.

The @SECGov's Innovation Exemption creates a path for tokenized securities to trade onchain in the United States - a big step towards more modern, accessible, and competitive markets. @coinbase already supports tokenization for non-U.S. customers from Abu Dhabi. It is good to see a path emerging to bring these capabilities onshore. Huge thanks to @SECPaulSAtkins for advancing regulatory clarity in a way that supports innovation, investor choice, and the strength of American capital markets.

Completely agree. @SenThomTillis is principled, fearless, hard nosed and fair. We weren’t thrilled with the compromise he and @Sen_Alsobrooks came up with on rewards, but it was a thoughtful good faith effort to get it right. It was especially impressive to see him stick by his compromise even under enormous pressure. Outstanding person and public servant.

The Trump, Obama and Biden administrations all agreed that we need a federal regulatory framework for crypto. While the vote came up short yesterday, there is broad agreement that we need clear federal rules. That's why it's so important that the @CFTC and @SECGov are already stepping up to get the job done. Thanks to @MorningsFBN for having me on to discuss.

For months, we’ve been told stablecoin rewards threaten community banks by draining deposits and reducing lending. The Council of Economic Advisers @CEA47 just tested that claim again. The answer is the same: the costs outweigh the lending benefits for consumers 6.6 to 1. Banning stablecoin rewards increases bank lending by just 0.02% — including about $500 million for community banks. Meanwhile, CEA estimates the prohibition imposes a net welfare cost of roughly $800 million a year. The losers? Everyday Americans and business. So what has this fight really been about? Big banks have enormously valuable incumbent economics to protect. They sit at the center of the traditional payments system. And while no one begrudges banks earning money by putting deposits to productive use, banks can also earn billions simply by holding reserves at the Fed — paying customers little while collecting interest from the government, without financing a single loan. Stablecoins challenge both of those incumbent economics. This has always been about protecting the big banks’ payments franchise and protecting the billions they can earn on customer money parked at the Fed. It was never about protecting community-bank lending.

Tomorrow, the Senate will consider the CLARITY Act. A year ago, a group of Democratic senators put out their own framework for what serious market structure legislation needed to accomplish. They identified seven pillars: closing the regulatory gap, clarifying the status of digital assets, bringing issuers and platforms into the regulatory framework, combating illicit finance, preventing corruption and abuse, and ensuring fair and effective regulation. Every one of those seven pillars is addressed in the legislation before the Senate tomorrow. And that’s only part of the story. The final text incorporates 126 additional substantive changes requested by Democrats. It includes a historic ethics framework, stronger enforcement — including a role for state attorneys general — new protections around conflicts and insider abuse, stronger consumer and customer-property protections, tougher illicit-finance rules, and greater accountability for the regulators charged with overseeing these markets. None of that happened by accident. It is the product of more than a year of members raising hard questions, negotiating difficult issues and materially reshaping the legislation. Congress rarely gets the opportunity to write the rules for an entirely new financial market from the ground up. This is one of those moments. The bill before the Senate tomorrow is fundamentally different from where this process began. Democratic negotiators played a major role in getting it here. They should vote for it tomorrow. Let’s pass CLARITY.

In @AmerBanker today, I take on three myths that have lingered far too long in the CLARITY stablecoin rewards debate - and obscured the opportunity stablecoins offer the U.S. and community banks. Three facts: 1. The U.S. Treasury never warned of $6.6 trillion in deposit flight from stablecoins. 2. No one has demonstrated an empirical link between stablecoin adoption and deposit outflows. Stablecoins and bank deposits have grown alongside each other for years. 3. The Tillis-Alsobrooks compromise addresses the deposit-like rewards that banks said they feared. The bigger story is the opportunity. GENIUS created a safe digital dollar that moves instantly, settles around the clock, and extends American financial leadership. For community banks, stablecoins and public blockchains offer the ability to move money globally as quickly and efficiently as the largest institutions. Let’s not make stablecoins less useful before everyone has a chance to put them to work. Let’s pass CLARITY. Read the op-ed:

Great piece in @FortuneMagazine by @coinbase’s @johnjdagostino and @RegionsBank’s Chris Kennedy about the opportunity that stablecoins offer to community banks. New technology can level the playing field - giving smaller banks access to faster payments, global settlement and modern treasury services that once required the scale of the largest institutions. That means more tools to serve their customers, compete and grow. CLARITY builds on this opportunity by giving banks the legal tools to participate in the digital financial system - one more reason for the Senate to vote yes next week.

Today @coinbase filed our response to @CFTC and @SECgov’s joint RFC on product definitions and alternative compliance for perpetual derivatives products. It’s crucial that convoluted definitions and jurisdictional overlap be addressed so the US can onshore and regulate activity, safely open up opportunity to US consumers, and keep the US competitive with foreign jurisdictions who have a massive head start on innovation in this space.

Just as Congress is about to pass a federal regulatory framework on digital assets, Illinois has taken two steps back and passed an absurd tax law that violates a law Congress already passed. Not only is this unconstitutional overreach – it’s simply bad policy. Illinois is systematically driving business out of state and isolating itself while punishing everyday consumers for wanting to participate in the digital economy. @BlockchainAssn and @crypto_council have filed suit to help protect these consumers from a law that accomplishes nothing but harm. There is no winner, but there are clear losers: Illinoisans themselves.