Bessent backs CLARITY Act, sees banks, crypto aligning

U.S. Treasury Secretary Scott Bessent testified before the Senate Banking Committee on Thursday, saying banks and crypto firms could eventually offer similar products and pressing Congress to pass the CLARITY Act, a crypto market structure bill. He pledged to work to curb deposit volatility linked to digital assets.

Bessent argued that clearer rules are needed to integrate digital assets into the banking system and to reduce incentives for customers to shift funds from banks into higher-yield crypto products. He urged senators to advance the bill from committee, citing the need for regulatory certainty for banks and crypto companies.

In an exchange with Sen. Cynthia Lummis, he was asked whether conventional banks and crypto companies might end up providing the same kinds of services. “I think that can happen over time,” he responded. Treasury, he added, has been in talks with small and community banks about ways they could offer digital asset services.

He told lawmakers that digital finance cannot progress without a legal framework and government oversight that promotes safe and sound practices while allowing innovation. “It’s a balance that is being worked out,” he remarked.

Negotiations over the CLARITY Act have focused on rules for stablecoins — tokens designed to maintain a one-to-one value with the U.S. dollar — including possible limits on interest-like yields offered by crypto platforms. Bessent warned that rapid swings in deposits are “very undesirable” because banks rely on stable funding to support lending. “We will continue to work to make sure that there is no deposit volatility associated with this,” he told the panel.

The bill remains stalled in the Senate Banking Committee while bipartisan talks continue. Some crypto firms have opposed proposed restrictions on stablecoin yields, and industry participants have floated compromises, such as expanding the role of community banks in a stablecoin framework, to break the logjam.

Bessent maintained that the goal is to bring digital assets into a supervised environment without undermining bank funding. He indicated that community institutions could be part of that approach if rules are clear.

He also criticized industry resistance to the legislation. “We have to get this CLARITY Act across the finish line, and any market participants who don’t want it should move to El Salvador,” he told senators.

Bessent described the administration’s position as requiring bank-like risk controls when crypto activity touches consumer funds, particularly for stablecoins. The CLARITY Act would set federal standards for issuing, trading and custody of crypto assets and outline how banks and nonbanks can engage with stablecoins.

He said Treasury will keep working with lawmakers and regulators to limit deposit flight as crypto products mature and to create a path for banks to offer regulated digital asset services. Over time, he predicted, consumers could see banking products that resemble current offerings in crypto.