Solomon Drops the Yield Sword, Picks Up CLARITY 🏦

Goldman Sachs Chairman and CEO David Solomon has publicly endorsed the Digital Asset Market Clarity (CLARITY) Act, breaking with much of the Wall Street banking industry that continues to oppose key stablecoin yield provisions in the bill. In an interview with Politico, Solomon called the legislation "not perfect" but said it would "create a level playing field to enhance market stability and allow these markets to develop appropriately." He added, "I'm very supportive of moving the CLARITY Act forward, so we can get some market structure in place and start to move the innovation process along."

The endorsement lands as Republican senators circulate updated text of the bill ahead of a possible Senate floor vote next week. CLARITY would formally classify most crypto assets as non-securities outside the purview of the U.S. Securities and Exchange Commission, provide protections for decentralized software developers, and address the practice of offering rewards on stablecoin balances. Crypto companies such as Coinbase have for years offered rewards on certain stablecoins like Circle-issued USDC, with yields typically ranging between 3-5% APY.

Solomon's position puts him at odds with other major banking executives, most notably JPMorgan Chase CEO Jamie Dimon, who in a May appearance on Fox Business said the bill "allows them to effectively pay interest on deposits, stablecoins or something like that, without protection that they should have." Dimon added, "The banks will not accept it that way. I'm not worried about stablecoins but if it happened I'm telling you I will have nothing to do with it and it will eventually blow up." Banking trade groups have pressed lawmakers to change the stablecoin yield language, arguing that paying rewards on dollar-pegged tokens without bank-equivalent oversight gives crypto firms an unfair competitive edge.

Senate Republicans released the latest draft of CLARITY on Wednesday, including new ethics provisions restricting the U.S. president and his family from engaging in cryptocurrency business activities, though the ban is written to expire. Many Democrats have said the ethics language is insufficient because it leaves enforcement to the U.S. Department of Justice rather than state authorities. Senator Elizabeth Warren of Massachusetts said on Wednesday that "the bill goes even further to protect the President's crypto profits by barring the next Department of Justice from ever holding Trump accountable," adding that "the underlying bill still fails to adequately protect investors, our financial system, and our national security. This bill should be dead on arrival." Republicans will need at least seven Democratic votes to reach the 60-vote threshold required for passage.

Solomon's support adds the weight of one of Wall Street's largest banks to the pro-CLARITY coalition, which already includes Ripple CEO Brad Garlinghouse and Coinbase CEO Brian Armstrong. As of Thursday, Senate leaders had not scheduled a floor vote on the measure.