The clock is ticking for cryptocurrency legislation in Washington, and a key White House adviser is sounding the alarm.
“Let’s not let any moss grow here,” urged Patrick Witt, executive director of the President’s Council of Advisors for Digital Assets, on Yahoo Finance’s Opening Bid.
Witt warned the window for passing the critical Clarity Act is “rapidly closing” as the political calendar shifts focus toward upcoming midterms, which often consume all legislative oxygen on Capitol Hill.
As the industry grapples with uncertainty and a volatile market, the prospect of clear regulatory guidelines hangs in the balance, threatening to leave investors in limbo. To the White House, crypto’s lack of clarity is not merely red tape; it is a barrier to mainstream adoption for consumers and financial firms.
Witt noted that getting the bill done will require nimbleness from both the crypto community and big banks, noting the council has held numerous meetings at the White House to find a middle ground.
Currently, senators on both sides have voiced concerns about a potential “deposit flight” from traditional banking if stablecoins aren’t properly regulated. Without clear rules, many financial institutions remain hesitant to fully engage with crypto, fearing unknown legal liabilities — a standoff that contributes to market volatility and stifles innovation.
This has led to calls for a “scalpel” approach to address specific concerns like “idle yield” on stablecoins, rather than a “chainsaw” approach that could derail the entire bill.
Coinbase (COIN) CEO Brian Armstrong echoed those concerns during the company’s earnings call on Feb. 12, though he struck a more upbeat tone. He told investors that he’s “quite optimistic” that some legislation will get passed “in the next few months” as crypto industry players remain “united” in their asks.
“There’s an opportunity to make a win-win outcome here for everyone, for banks and crypto companies and the US citizen and everyone,” Armstrong said. “We just want to have a good level playing field.”
As a publicly traded company heavily invested in the crypto ecosystem, Coinbase’s profitability and strategic plans are directly impacted by Washington’s indecision. In its most recent quarter, the company reported a $667 million net loss, which it attributed in part to volatility but also to the shadow of regulatory uncertainty.
At its core, the Clarity Act aims to establish clear jurisdictional lines between the SEC and the CFTC regarding digital assets. Currently, many cryptocurrencies exist in a gray area, with both agencies asserting partial claims. The bill is designed to define which digital assets would be deemed securities, falling under the SEC’s purview, and which are commodities, under the CFTC.
The House of Representatives passed its version of the Clarity Act last year, but the bill has since stalled in the Senate. Witt explained that while portions related to the CFTC have advanced through the Agriculture Committee, the securities provisions are stuck in the Senate Banking Committee.
Still, Witt says the administration plans to keep working with lawmakers “to make it better,” because it is ultimately “a good product at the end of the day.”
