Crypto markets regain ground just as a multi-trillion-dollar fight over yield-bearing deposits intensifies in Washington.
Bitcoin’s latest rally is colliding with a high-stakes policy fight in Washington, forcing advisors to reassess both client demand for digital assets and the role of bank deposits in a higher-yield world.
Bitcoin climbed back above $72,000 on Wednesday, recovering from its recent doldrums even as traditional markets whipsawed on escalating tensions in the Middle East. The token is still down about 45% from its October peak near $126,000, but it has bounced from recent lows around $63,000 while stocks, oil, and even gold have swung more violently.
Crypto’s relative calm has come alongside a fresh political tailwind. President Donald Trump on Wednesday issued a public endorsement of the Clarity Act, a digital asset market structure bill whose progress has been stalled over a dispute about whether crypto firms can pay yields on stablecoin balances.
As reported by CNBC, the social media post from Trump criticized banks for holding up the legislation, saying “The Genius Act is being threatened and undermined by the Banks, and that is unacceptable.” He added that lenders “need to make a good deal with the Crypto Industry because that’s what’s in best interest of the American People.”
The message landed immediately in markets tied to the policy fight. Shares of Coinbase, the largest US crypto platform, jumped as much as 15% in midday trading, while big-bank stocks including JPMorgan Chase and Bank of America dipped modestly. Coinbase and peers have pushed to keep paying stablecoin yields, arguing it lets customers earn on idle cash-like balances. Banks see a direct competitive threat.
Executives at the largest lenders have pointed to a Treasury study suggesting they could lose as much as $6.6 trillion in deposits if yield-bearing stablecoins were to gain traction. They warn that such an outflow could weaken some banks, particularly smaller ones that depend on low-cost deposits to fund loans that support the real economy. From that perspective, the stablecoin debate is not just about crypto; it is about how much of the financial system goes back to traditional mechanisms of capital creation.
JPMorgan chief executive Jamie Dimon has framed it as a basic fairness and safety issue. “It can’t be, you have these people doing one thing without any regulation, and these people doing another,” Dimon told CNBC this week. “If you do that, the public will pay. It will get bad.”
Seeking a level playing field, Dimon said platforms paying interest on stored balances should face the same capital, liquidity, anti-money laundering, and deposit insurance rules as banks. He has said banks could live with rewards tied to transactions, but not with what he sees as deposit-like products operating outside the banking regime.
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For their part, crypto firms say the risks are contained and argue that stablecoins backed by Treasuries could boost demand for US debt
The White House’s crypto team is pushing back. A CoinDesk report points to a social media post by Patrick Witt, executive director of the President’s Council of Advisors for Digital Assets, saying that paying a yield on stablecoins does not automatically make them bank deposits. He pointed to the Genius Act, which he said “explicitly forbids stablecoin issuers from doing the latter. Stablecoins ≠ Deposits.”
Witt argued that the core risk is not yield itself but what providers do with the underlying assets. “The deceit here is that it is not the paying of yield on a balance per se that necessitates bank-like regulations, but rather the lending out or rehypothecation of the dollars that make up the underlying balance,” he said.
For advisors, the policy uncertainty arrives just as some clients are rediscovering digital assets. Bitcoin’s rebound, alongside gains in Ethereum and other major tokens, is occurring after a prolonged selloff that already flushed out many momentum-driven investors. That may make the space feel less crowded, even as political noise rises.
At the same time, the stablecoin fight strikes directly at how clients hold cash and near-cash assets. Yield-bearing stablecoins backed by Treasuries could, in theory, compete with bank deposits, money market funds, and high-yield savings accounts for dollars that advisors help allocate. Yet the rules around those products – including how they are regulated, insured and taxed, and how they fit into compliance frameworks – remain unsettled.
Advisors who choose to engage will likely need to separate three questions: whether to treat bitcoin and other tokens as speculative risk assets in diversified portfolios; how to evaluate stablecoin products that look and feel like cash alternatives; and how to navigate a regulatory landscape that is being shaped in real time by a public clash between banks, crypto firms, and the White House.
