Trump sides with cryptocurrencies in battle with banks over stablecoin yield

President Donald Trump has thrown his support behind cryptocurrency companies in their high-stakes battle with US banks over whether they can offer interest-like returns on stablecoins.

In a social media post late Tuesday, Trump intensified pressure on banks to back off the issue of stablecoin returns.

This is the main sticking point holding up passage in Congress of the Clarity Act, a companion bill to the Genius Act approved last year that sets a framework for regulated stablecoins.

“The Genius Act is being threatened and undermined by banks, and this is unacceptable,” Trump said in his post. “They need to make a good deal with the cryptocurrency industry because that is what is in the best interest of the American people.”

While Trump’s decision to support the cryptocurrency industry could sway members of his Republican party in the GOP-led Congress, it is unclear whether his support will be enough to ensure the bill’s passage. The move also raises new questions about a potential conflict of interest, with the president and his family reportedly amassing hundreds of millions of dollars from interests in companies including cryptocurrency platform World Liberty Financial.

The disagreement between industries centers on whether crypto companies like it or not Coinbase It can offer returns on stablecoins. While cryptocurrency companies see it as a consumer-friendly innovation that will allow people to make money from their idle cash, banks have warned that the competing product could take trillions of dollars out of their industry.

Executives from JPMorgan Chase and Bank of AmericaThe two largest US banks by assets cited a Treasury Department study that suggested banks could lose up to $6.6 trillion in deposits if stablecoins offer a yield. This could destabilize some banks, especially smaller ones, and remove a source of loan financing for businesses across the country.

“It can’t be that you have these people doing one thing without any regulation, and these people doing another thing,” JPMorgan Chase CEO Jamie Dimon told CNBC’s Leslie Picker on Monday. “If I do that, the public will pay the price. It will get bad.”

In recent months, the president has hosted a series of meetings at the White House between the two sides in hopes of brokering a deal, but the banks have not backed down, according to people familiar with the meetings.

He is now clearly putting his weight behind cryptocurrencies.

“Americans should make money with their money,” Trump said in the post. “This industry cannot be taken away from the people of America when it is so close to becoming truly successful.”