Treasury Secretary Slams Crypto Firms Opposing Senate Bill

In stark testimony on Thursday, Treasury Secretary Scott Bessent delivered a blunt message to the cryptocurrency industry: support the Senate’s market structure bill or face the consequences of operating in a regulatory vacuum. “There seems to be a nihilist group in the industry who would prefer no regulation over this very good regulation,” Bessent stated, directly challenging firms that have withdrawn support. He emphasized the existential importance of the legislation, known as the Clarity Act, declaring it “impossible to proceed” with regulating crypto in the United States without its passage.

The Treasury Secretary’s frustration culminated in a pointed suggestion for dissenters: “Any market participants who don’t want it should move to El Salvador.” This remark highlights the high-stakes nature of the debate, framing the bill as a non-negotiable foundation for the industry’s domestic future. Bessent’s comments align with a previous White House rebuke, which warned that the belief the crypto industry could “operate indefinitely without a comprehensive regulatory framework” was “pure fantasy.” The unified message from the administration and Treasury signals a dwindling patience for industry objections that delay legislative progress.

At the heart of the controversy are provisions related to stablecoins—crypto tokens like USDC and USDT pegged to the U.S. dollar. The pivotal dispute centers on whether these digital assets should be permitted to generate interest or yield for holders. Coinbase, America’s leading crypto exchange, abruptly pulled its support for the bill last month over this very issue. CEO Brian Armstrong argued the company would “rather have no bill than a bad bill,” insisting the legislation must allow for yield-bearing stablecoins.

This position has ignited fierce opposition from the traditional banking lobby, which warns that allowing stablecoins to offer competitive yields could trigger a destabilizing exodus of deposits from community and regional banks. These institutions rely on stable deposits to fund lending for agriculture, small businesses, and real estate in their local communities. In his testimony, Bessent appeared to lend significant credence to these concerns, particularly in response to questioning from Senator Cynthia Lummis (R-WY), a key bill author. “I’ve been a champion of these small banks, and deposit volatility is very undesirable,” Bessent said. “It’s the stability of those deposits that allows them to lend into their communities… We will continue to work to make sure there is no deposit volatility associated with this.”

While Coinbase has since returned to negotiations, it continues to adamantly argue that fears of banking system destabilization are unfounded. This creates a fundamental clash: crypto advocates view yield as a core innovation and utility of digital assets, while traditional financial institutions see it as a direct threat to their deposit base and, by extension, their ability to support the broader economy.

The protracted and contentious nature of the negotiations was palpable during the Senate Banking Committee hearing. Senator Mark Warner (D-VA), a pro-crypto Democrat deeply involved in crafting the bill’s details, expressed profound exhaustion, telling the Treasury Secretary, “I feel like I’m in crypto hell.” Bessent’s reaction—a laugh and an almost-reply—captured the shared sense of weariness among policymakers navigating the complex and often contradictory demands of the crypto industry and traditional finance.

The path forward for the Clarity Act remains fraught. Bessent’s stern rhetoric and alignment with banking concerns over deposit flight suggest the Treasury is prioritizing financial stability and the interests of the existing U.S. banking system in these final negotiations. However, with a major player like Coinbase still firmly advocating for yield provisions, a compromise that satisfies both sides seems elusive. The outcome will determine not only the regulatory landscape for cryptocurrencies but also define the relationship between emergent digital asset firms and the entrenched pillars of TradFi for years to come. As Bessent implored, getting the bill “across the finish line” is presented as an urgent necessity, but the final form it takes will reveal whose interests—those of innovators or incumbents—ultimately prevail in shaping America’s crypto future.