‘Trillions Are Waiting’: White House Says Bitcoin and Crypto Inflows Imminent as CLARITY Act Nears Final Vote

The White House’s top digital asset advisor, Patrick Witt, declared that “trillions of dollars in institutional capital” are poised to enter Bitcoin and cryptocurrency markets once the CLARITY Act passes, providing the regulatory clarity institutional investors demand.

With the House having passed its version last year and the Senate finalizing amendments, the market structure bill faces two critical hurdles: resolving the stablecoin yield standoff between banks and crypto firms, and addressing Democratic demands for ethics provisions related to President Trump’s crypto ventures. As the midterm elections loom, Witt warned that the window of opportunity is “rapidly closing,” urging stakeholders to reach a compromise by month’s end.

The $Trillion Question: White House Official Confirms Institutional Capital on Sidelines

If you’ve ever wondered why Bitcoin hasn’t gone parabolic despite all the institutional adoption talk, Patrick Witt just gave you the answer: trillions are waiting on the sidelines, and they’re waiting for regulatory clarity.

In a Yahoo Finance interview this week, the Executive Director of the President’s Council of Advisors for Digital Assets delivered a message that should grab every crypto investor’s attention. “There are trillions of dollars in institutional capital on the sidelines waiting to get into this space,” Witt said, later reiterating the point on X.

These aren’t your typical retail investors throwing pocket money at meme coins. Witt is talking about pension funds, endowments, insurance companies, and sovereign wealth funds—institutions that manage trillions and move markets when they allocate even a fraction of their portfolios.

What’s holding them back? The same thing that’s been holding them back for years: regulatory uncertainty. Witt made clear that the administration views the CLARITY Act as the key that unlocks this floodgate.

“The improved regulatory clarity under the Clarity Act allows both banks and crypto firms to operate with confidence, creating opportunities for innovation and institutional participation,” he explained.

For investors watching Bitcoin struggle around $68,000 after falling from October’s all-time highs, this represents a potential catalyst that could fundamentally change market dynamics.

CLARITY Act Status: Where the Crypto Market Structure Bill Stands Today

Understanding where the bill stands requires tracking two parallel tracks through Congress.

The House and Senate Split

The House passed its version of the Clarity Act last year, establishing a baseline framework for how digital assets would be regulated. The Senate, however, is drafting its own amendments, creating the usual legislative back-and-forth that determines the final shape of any major bill.

Within the Senate, jurisdiction is split. Sections addressing the Commodity Futures Trading Commission (CFTC) have cleared the Agriculture Committee, reflecting the CFTC’s traditional role over commodities. But portions covering the Securities and Exchange Commission (SEC) remain stuck in the Senate Banking Committee, where the most contentious issues are being fought.

A markup session scheduled for January was postponed, and negotiations continue behind closed doors. Witt emphasized the administration’s commitment: “We are taking it so seriously. It’s why we’ve hosted the different interested stakeholders here at the White House, and we’re going to continue to stay at the table and encourage them to find a compromise on this issue”.

The Two Sticking Points

Industry sources who spoke with The Block identified the two major obstacles holding up progress:

1. Stablecoin yield treatment: Whether and how platforms can offer rewards on stablecoin holdings
2. Trump ethics provisions: How to address President Trump’s financial interests in crypto ventures** **

Both issues must be resolved before the bill can advance, and neither has an obvious compromise.

The Stablecoin Yield Battle: Banks vs. Crypto

Why Banks Are Fighting Stablecoin Rewards

The stablecoin yield dispute has emerged as the central flashpoint between Wall Street and Silicon Valley. Banking groups have criticized the GENIUS Act—the stablecoin law passed last summer—arguing that allowing stablecoin yields could draw deposits away from traditional banks and harm community lending.

The bankers’ position is straightforward: if customers can earn 3-5% on stablecoins held at crypto exchanges, why would they keep money in checking accounts paying near zero? That deposit flight, bankers warn, would constrain their ability to make loans and could destabilize the banking system.

During a recent White House meeting, banks circulated a one-page document titled “Yield and Interest Prohibition Principles,” taking a hard line that any form of stablecoin yield or reward is unacceptable.

The Crypto Counter-Argument

Crypto firms and their advocates see this differently. Kevin Wysocki, head of policy at Anchorage Digital, noted that if banks want to change the status quo—which currently allows third-party platforms like Coinbase to offer rewards—they need a bill. “If banks want a change, if they want rewards more limited, then they need a bill. So in some sense, banks need a market structure bill just as much or even more than crypto does”.

The Digital Chamber, a blockchain trade association, released its own principles document pushing back against the banks’ proposal. The group signaled willingness to give up “static holding” rewards that most closely resemble bank account interest, but insisted on protecting rewards tied to specific activities:

• Liquidity provision rewards: Compensation for depositing stablecoins into DeFi protocols to facilitate trading
• Ecosystem participation rewards: Incentives for engaging with applications, completing transactions, or participating in governance** **

Cody Carbone, CEO of the Digital Chamber, framed this as a genuine compromise. “We want policymakers to understand that we see this as a compromise,” he said, noting that since the GENIUS Act is already law, the industry’s willingness to forgo holding rewards is a significant concession.

Patrick Witt’s View: Banks Shouldn’t Fear

White House advisor Patrick Witt weighed in directly on the dispute, arguing that banks have nothing to fear from stablecoin competition.

“Banks can also offer stablecoin products to their customers just like crypto companies can,” Witt told Yahoo Finance. “This doesn’t create an unfair advantage for either side. Many banks are currently applying for OCC banking charters to begin offering products similar to banks”.

Witt called the stablecoin yield fight “unfortunate,” emphasizing that crypto service providers sharing revenue with customers doesn’t threaten banking business models. He predicted that over time, banks will discover opportunities to use these products to offer new services and expand their customer relationships.

The White House has called for a compromise by the end of February, with Witt indicating another meeting may be scheduled next week to break the logjam.

The Ethics Elephant: Trump’s Crypto Conflicts

Beyond policy disagreements, the bill faces a politically charged obstacle: what to do about President Trump’s personal financial interests in crypto.

The World Liberty Financial Controversy

Trump’s ties to the cryptocurrency industry have become a major sticking point, sharpened by recent news that an Abu Dhabi royal backed a $500 million investment in World Liberty Financial, a crypto venture co-founded by the Trump family. Under the terms, a company backed by Sheikh Tahnoon bin Zayed Al Nahyan acquired a 49 percent stake in World Liberty—with $187 million going to Trump-affiliated entities.

The deal has hardened Democratic resolve to include ethics guardrails in the bill. Sen. Elizabeth Warren, Ranking Member of the Senate Banking Committee, wrote to the Comptroller of the Currency demanding a halt to any review of World Liberty’s bank charter application until Trump divests from the company.

“We have never seen financial conflicts or corruption of this magnitude,” Warren wrote. “If the application is approved, you would promulgate rules that influence the profitability of the President’s company. You would also be responsible for directly supervising and enforcing the law against the President’s company—and its competitors”.

The Democratic Position

Democrats, led by Sen. Adam Schiff and Sen. Ruben Gallego, have negotiated for months with Republicans and White House officials over ethics language but have been unable to clinch a deal. The Abu Dhabi investment has given them new leverage and a renewed sense of urgency.

“It has created more of a sense of moral urgency for us to have ethics as part of this,” said Sen. Cory Booker. “The Trump administration has demonstrated the grossest, most egregious corruption from the White House we have ever seen”.

Schiff argued the bill needs to include ethics language that doesn’t “treat the president differently than any other federal employee.” The Abu Dhabi deal, he said, means “if anybody needed another reminder, they just got it”.

The Republican and White House Response

Republicans have largely brushed aside the ethics concerns. Sen. Cynthia Lummis, a crypto-friendly Wyoming Republican involved in ethics negotiations, characterized the World Liberty deal as “another attack on Trump that is pretty baseless, to be honest”.

“How far do you have to separate yourself from the financial decisions of your children before you take serious criticism?” Lummis asked.

White House officials have drawn a firm red line. Patrick Witt told CoinDesk TV that the administration won’t sign off on legislation that targets the president directly. Some early Democratic proposals for ethics provisions were “completely outrageous,” Witt said.

“We’ve made clear that there are red lines. We’re not going to allow the targeting of the president individually or his family members,” he stated. Witt expressed hope that Democrats would propose more reasonable versions “that feel a little bit closer to something that could ultimately be agreed to,” while emphasizing that “this is not an ethics bill”.

The Political Math

Because Republicans will need at least seven Democratic votes to reach the 60-vote threshold in the Senate, Democrats have real leverage. But crypto industry super PACs also have leverage—Fairshake recently disclosed over $190 million on hand heading into the midterms, ready to reward allies and punish opponents.

This creates a complex dynamic: Democrats want ethics provisions, but facing well-funded primary challenges if they block popular crypto legislation.

The Clock Is Ticking: Why 2026 Is a Make-or-Break Year

The Midterm Election Threat

The urgency around passing the CLARITY Act isn’t manufactured—it’s driven by the political calendar.

Treasury Secretary Scott Bessent warned that if Democrats win the House in November—a scenario he called “far from my base case”—the “prospects of getting a deal done will just fall apart”. Witt echoed this, stating that a window of opportunity exists but is “rapidly closing”.

The administration’s goal is to get the bill signed into law before the midterm campaign season consumes Congress’s attention and before the possibility of a Democratic House majority materializes.

The Spring Deadline

Bessent has repeatedly emphasized that the bill needs to reach President Trump’s desk “this spring.” In practical terms, that means before the August recess at the latest, and ideally before campaigning intensifies.

Ron Hammond, head of policy at Wintermute, put the odds of passage in 2026 at just 25%. Kevin Wysocki of Anchorage Digital was more optimistic at 50%, noting that “banks need it”. One source familiar with negotiations gave it 60%, but warned: “The clock is ticking”.

What Happens if the Bill Fails

If the CLARITY Act doesn’t pass in 2026, several consequences follow:

Status quo persists: The GENIUS Act remains law for stablecoins, and existing regulatory guidance continues for everything else. But the comprehensive framework the industry has sought for years remains out of reach.

Regulatory uncertainty continues: Without clear statutory definitions of when tokens are securities versus commodities, the SEC and CFTC can continue their jurisdictional turf wars.

Institutional capital stays on sidelines: Those trillions Witt referenced remain parked, waiting for clarity that may take years to arrive.

Global leadership ceded: As the U.S. debates, other jurisdictions are moving forward. The EU’s MiCA framework is already implemented, the UK is developing its approach, and Asian financial centers are competing for crypto business.

What Passage Would Mean for Bitcoin and Crypto Markets

The Institutional Floodgate

If the CLARITY Act passes and provides the regulatory clarity Witt describes, the implications for Bitcoin and crypto markets could be profound.

“There are trillions of dollars in institutional capital on the sidelines waiting to get into this space,” Witt said. To put that in perspective, the entire crypto market capitalization is around $3 trillion. Trillions in new inflows would be transformative.

Pension funds, endowments, and insurance companies currently face fiduciary constraints that limit crypto exposure. Clear rules of the road—knowing which tokens are commodities, which are securities, and how custody and trading must be structured—would remove those constraints.

The Bitcoin Strategic Reserve Angle

Witt also addressed the federal government’s own Bitcoin holdings, revealing that an executive order has halted uncontrolled liquidation of seized digital assets. This action, he said, prevented potential losses that “could have been tens of billions of dollars”.

Agencies are now working to centralize oversight, identify wallets holding Bitcoin and other digital assets, and improve accounting practices. Lawmakers are reviewing proposals to formalize authority over federal digital assets, including legislation from Sen. Cynthia Lummis and a forthcoming House bill from Rep. Begich.

“Ultimately, if Congress decides, we could add to that stockpile with outright purchases,” Witt said, noting that such acquisitions would require congressional appropriations approval.

This raises the possibility—still speculative, but now officially discussed—of the U.S. government becoming not just a holder of seized Bitcoin but an active buyer, adding to its stockpile as a matter of strategic policy.

The Global Context: U.S. Leadership at Stake

As Washington debates stablecoin yields and ethics provisions, the rest of the world isn’t waiting.

The EU’s Markets in Crypto-Assets (MiCA) regulation is fully implemented, providing clear rules for the 27-nation bloc. MiCA distinguishes between asset-referenced tokens and e-money tokens, and explicitly bans interest tied to holding payment-like stablecoins.

Hong Kong is moving forward with a licensing model for stablecoin issuers, with regulators planning to issue first licenses as early as March 2026. The United Arab Emirates has established a Payment Token Services Regulation framework that prohibits interest related to holding duration.

The UK is developing its approach, adding macroprudential tools to manage potential stablecoin adoption at scale. While yield isn’t explicitly outlawed, it’s implicitly constrained—if a stablecoin begins to resemble a collective investment scheme, it triggers additional licensing requirements.

Patrick Witt, reflecting on the World Economic Forum in Davos, described it as a “turning point” for global crypto normalization. He observed traditional players moving from lack of understanding to fear, and finally to incorporating crypto into their own product offerings.

The question is whether the U.S. will lead this global conversation or cede leadership to jurisdictions with clearer rules.

The Bottom Line: What Investors Should Watch

For crypto investors trying to position for what comes next, several factors bear watching:

The Stablecoin Yield Negotiations

Watch whether banks and crypto firms can reach a compromise by month’s end. The Digital Chamber’s proposal—abandoning static holding rewards while preserving activity-based incentives—represents a potential middle ground. If banks accept this framework, the bill can move forward.

The Ethics Language

Watch what emerges from Senate negotiations on ethics provisions. Democrats have leverage but face political pressure from well-funded crypto super PACs. A compromise that addresses ethics concerns without singling out Trump personally might be possible.

The Calendar

Watch the Senate Banking Committee’s schedule. A markup session could come in March, with new draft bill text released beforehand. If the bill clears committee with bipartisan support, odds of passage improve significantly.

The Midterm Election

Watch polling on the House races. If Democrats appear likely to flip the chamber, urgency increases. If Republicans seem safe, the administration may have more breathing room.

Conclusion: A Defining Moment for U.S. Crypto Policy

Patrick Witt’s declaration that “trillions are waiting” to enter Bitcoin and crypto markets captures both the promise and the frustration of the current moment. The capital is there. The institutional demand is real. What’s missing is the regulatory clarity that would allow that capital to deploy.

The CLARITY Act represents the best chance in years to provide that clarity. But its fate hinges on resolving two very different disputes: one between banks and crypto firms over stablecoin yields, and another between Democrats and Republicans over presidential ethics.

The White House is pushing hard for a compromise by the end of February. Witt has hosted stakeholders, urged flexibility, and warned that the window is closing. Treasury Secretary Bessent has made clear that a Democratic House victory in November would likely kill the bill’s prospects.

For crypto investors, the stakes couldn’t be higher. Passage could unlock those trillions, fundamentally reshaping market dynamics. Failure would mean continued uncertainty, continued sideline-sitting by institutional capital, and continued risk that the U.S. cedes its leadership position to more forward-thinking jurisdictions.

As Witt put it simply: “We’ve got to get this done”.