The GENIUS & CLARITY Acts Explained: Banks Win, Crypto Wins… Consumers Lose
If you've seen Coinbase CEO Brian Armstrong or Ripple's Brad Garlinghouse talking about the GENIUS Act and CLARITY Act on social media, you've probably heard them say these bills are good for crypto and good for consumers. In this video, Brian breaks down what's actually in these bills — and why the reality is very different from the marketing.
What the GENIUS Act Actually Did
The GENIUS Act was signed into law in mid-2025. Its most significant provision for everyday crypto users: stablecoin issuers are prohibited from passing yield on to consumers. Here's what that means in practice.
When you hold USDC on an exchange like Coinbase, the company behind USDC (Circle) invests the backing funds in short-term US treasuries. Those treasuries generate yield. Prior to the GENIUS Act, exchanges like Coinbase were passing that yield on to users — you'd earn 3–4% simply by holding USDC on the platform, similar to a certificate of deposit at a bank.
Banks didn't like this. It gave consumers a reason to move money off traditional bank accounts and onto crypto exchanges. The GENIUS Act closed that door by ruling that if a third party (like Coinbase) passes the yield to the consumer, it's treated as if the issuer passed it directly — which is prohibited. The yield now stays with the exchange or the issuer. Not with you.
What the CLARITY Act Is — and What It Isn't
The CLARITY Act is currently stuck in the Senate after passing the House. Coinbase and Ripple have been loudly advocating for it, framing it as a win for consumers. But the debate inside the CLARITY Act isn't about whether consumers get yield. That fight is already over — the crypto companies have already conceded on idle yield.
What they're actually arguing about now is whether consumers can receive small rebates and rewards when they perform certain actions on the platform — like trading a certain volume or moving funds in specific ways. That's not yield. That's a loyalty program. You only get a fraction of what you're owed, and only if you generate fee revenue for the exchange in the process.
As Brian puts it directly in the video: Coinbase has publicly acknowledged that if consumers don't receive yield, Coinbase's profits go up significantly. The exchanges and the banks are not on opposite sides of this issue. They're on the same side.
What You Can Do About It
There are two practical steps worth taking. First, if you're a US citizen, contact your senators and tell them you want the full yield — not rebates, not rewards. The CLARITY Act has not yet passed the Senate, which means there's still time to push back.
Second, consider going directly to the source. Circle and Ripple back their stablecoins with short-term US treasuries. You can buy those same treasuries yourself at TreasuryDirect.gov with no fees and no middleman. Roll three-month bills continuously and you capture the same yield the exchanges are keeping for themselves.
The broader point: the only reason to hold cash on an exchange is if you're planning to buy crypto with it. Holding stablecoins on an exchange long-term just makes the exchange richer. If you want to learn more about how crypto exchanges work and how to evaluate them, visit CryptoSchool.cc — and if you want to hold crypto in a genuinely tax-advantaged structure, iTrustCapital lets you do that inside an IRA where the rules actually work in your favor.
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