Witt Backs New CLARITY Act Stablecoin Rules Amid Banking Concerns

White House Crypto Council Director Patrick Witt has endorsed the latest draft of the CLARITY Act, which includes new stablecoin rules. The updated text aims to limit stablecoin rewards and give the US Treasury more authority in case of bank deposit losses.

The proposed mechanism introduces a 'circuit breaker' that would allow the Treasury secretary to impose further restrictions on stablecoin rewards if community banks lose deposits. This would only come into effect within 18 months of enactment, if widespread deposit flight occurs.

Witt defended the new rules by stating that data shows bank deposits have continued rising rather than falling, contradicting the 'deposit flight myth'. He argued that crypto companies have offered stablecoin rewards for years without causing the feared consequences.