TLDR
- Patrick Witt said foreign demand for dollar stablecoins can send new funds into US banks.
- Banking groups warned yield-bearing stablecoins could pull deposits from traditional banks.
- The GENIUS Act requires payment stablecoins to hold cash or cash-equivalent reserves.
- White House meetings continued as banks and crypto firms stayed divided on rewards.
Patrick Witt, a top crypto adviser in the Trump administration, said stablecoins could bring fresh money into US banks. He said global demand for dollar-backed tokens remains strong, especially outside the United States.
Witt made the case in a post on X on Wednesday. He said foreign users buy stablecoins from US issuers with local currency. He said that process creates new capital flows into the American banking system.
Witt links global dollar demand to new bank inflows
Witt serves as executive director of the President’s Council of Advisors for Digital Assets. He said the debate around rewards has missed a wider banking effect. He argued that compliant stablecoins can support deposit growth, not only deposit shifts.
“Lost in the rewards/yield debate is how GENIUS-compliant stablecoins will actually lead to deposit inflows,” Witt wrote. He added that foreigners exchange local currency for stablecoins from a US-based issuer. He said that creates net new capital entering American banks.
Lost in the rewards/yield debate is how GENIUS-compliant stablecoins will actually lead to deposit inflows.
Global demand for USD is massive. Foreigners exchange local currency for stablecoins from a US-based issuer.
That is net new capital entering the American banking system.
— Patrick Witt (@patrickjwitt) March 12, 2026
His comments came as banks and crypto firms continued to clash over stablecoin rewards. Some policy groups and lenders have said rewards could make stablecoins look like deposit products. They have also warned that customers may move funds away from banks.
That concern has become a key part of the policy fight. Banking trade groups want regulators to avoid rules that favor crypto issuers over banks. They say similar products should face similar standards and oversight.
Banks warn on rewards while crypto firms cite reserve rules
The American Bankers Association has backed limits on stablecoin rewards. A recent survey commissioned by the group found broad support for restrictions. The group said consumers were worried about financial risk and fair competition.
ABA President and CEO Rob Nichols said the banking industry supports competition and innovation. He also said regulators should not create “an uneven playing field.” His concern focused on crypto firms offering bank-like services under lighter rules.
Crypto firms have rejected that view. They said payment stablecoins under the GENIUS Act must be fully backed. They also said the law limits reserve assets to cash and cash-equivalent holdings.
Witt made a similar point earlier this month. He said yield alone does not require bank-style rules. He said the key issue is whether issuers lend or rehypothecate customer backing. He said the GENIUS Act bans that practice.
Reward dispute slows wider crypto legislation
The rewards dispute has also affected broader crypto legislation, including the Clarity Act. Talks between banks and crypto firms have not produced a settlement. That deadlock has kept the issue active in Washington.
The GENIUS Act already created a federal framework for payment stablecoins. Still, the fight over rewards remains unresolved. Industry participants continue to debate how far stablecoin issuers should go in attracting users.
President Donald Trump weighed in earlier this month. He said, “The Genius Act was the U.S.A.’s first big step to make the United States the crypto capital of the world.” He added that passing the Clarity Act would be the next step.
The White House has also held closed-door meetings with banking and crypto executives. People involved said the talks were productive. But bank representatives have kept their opposition to stablecoin rewards. The policy debate remains open.
