White Home-led negotiations over the Clarity Act ended Monday without a deal, as the crypto enterprise and banking lobbyists failed to bridge their differences on stablecoin yields, and a newly published $500 million funding by a UAE loyal in President Donald Trump’s family crypto project threatens to further complicate the invoice’s prospects.
The Clarity Act used to be designed to carry regulatory hotfoot bet to The united states’s crypto markets. As a replace, it has develop into entangled in a conflict-of-interest controversy that will perchance perhaps derail the administration’s prime crypto priority—and reshape the vogue forward for digital finance in the assignment.
The Yield Impasse
The meeting on the Eisenhower Govt Scheme of job Constructing, hosted by presidential crypto adviser Patrick Witt, brought collectively representatives from Coinbase, Circle, and Ripple, as well to banking exchange groups. After more than two hours, participants left without agreement on whether crypto exchanges might perhaps perchance perhaps additionally silent supply interest on stablecoins.
Crypto participants, who greatly outnumbered bankers, felt banks had been stalling. The White Home directed every aspect to achieve a compromise by month’s close.
The stakes are worthy. Treasury evaluation estimates as a lot as $6.6 trillion in deposits might perhaps perchance perhaps migrate from banks to stablecoins if yields are permitted. Banks warn this might perhaps perhaps kind an unregulated parallel monetary draw; crypto executives counter that banks merely misfortune rivals.
The dispute escalated in January when Coinbase CEO Brian Armstrong withdrew his make stronger for the draft invoice, asserting he would quite own no legislation than unsuitable legislation.
🚨NEW: Some preliminary coloration from sources in the room on the White Home stablecoin meeting that factual wrapped:
📌In attendance: Reps from @bankpolicy, @ABABankers, @FSForum, @ICBA, @Fidelity, @PayPal, @paradigm, @SoFi, @crypto_council, @BlockchainAssn, @DigitalChamber,… https://t.co/wNccPn21kT
— Eleanor Terrett (@EleanorTerrett) February 2, 2026
UAE Deal Casts Shadow
The Wall Avenue Journal reported that Sheikh Tahnoon bin Zayed Al Nahyan—UAE’s nationwide safety adviser and chair of its $1.5 trillion sovereign wealth fund—acquired a 49% stake in World Liberty Financial, the Trump family’s crypto company, factual four days before the inauguration.
Ethics watchdogs own condemned the deal as a blatant conflict of interest and capability constitutional violation. The timeline raises questions: Trump hosted Tahnoon for a White Home dinner in March; World Liberty’s $USD1 stablecoin facilitated a $2 billion UAE funding into Binance in May also; two weeks later, the administration permitted 500,000 Nvidia AI chips for export to the UAE, reversing Biden-era restrictions.
The Clarity Paradox
Right here lies the central irony: if passed, the Clarity Act would build watch over all US stablecoins—including World Liberty’s $USD1. Trump would signal into legislation guidelines governing his occupy family’s crypto enterprise. Irrespective of space the White Home takes on yield straight away impacts the $USD1’s aggressive space.
Democrats had been already demanding anti-corruption provisions before the UAE deal surfaced. Senator Elizabeth Warren has called the discipline easy corruption and has demanded congressional circulation. With Republicans controlling every chambers, alternatively, formal investigations dwell not seemingly.
Narrowing Course
The invoice has cleared the Home and Senate Agriculture Committee, but silent desires to pass the Senate Banking Committee. Democrats build leverage there, and their demands lengthen previous ethics provisions to embody fats CFTC staffing and stronger anti-money-laundering protections.
New York prosecutors own added one other complication, alleging in a letter that the legislation enables stablecoin issuers to profit from fraud by maintaining stolen funds in preference to returning them to victims.
Trump promised at Davos to signal market-structure legislation rapidly. But the convergence of yield deadlock, ethics concerns, and UAE allegations has made that timeline increasingly more unrealistic. Bitcoin’s 40% decline from its October height shows the mounting uncertainty.
The Clarity Act aimed to give determined guidelines for crypto markets. As a replace, it has develop into a gape in how presidential conflicts of interest can vague even the clearest legislative intentions.
