Layer One: OpenTrade CEO says stablecoin momentum won’t wait for Clarity

OpenTrade CEO: Stablecoin momentum won’t wait for Clarity

This week we are broadcasting from the Avalanche Summit 2026 in New York City. The two-day event brings together builders, investors, institutions and enterprises from across the AVAX ecosystem to discuss the future of real-world blockchain adoption.

This year’s summit kicked off just one day after a pivotal Clarity Act procedural vote in Congress, which lost 49-50 — far short of the 60 votes required to progress — in what is widely being interpreted as a significant setback for the crypto industry. Opinions are divided on whether the setback is temporary; one Republican aide told The Block that the bill is effectively dead in the water.

JPMorgan, however, suggested that the bill is “not fully dead” yet and could face another vote before the end of the year. Analysts at the bank nonetheless acknowledged that the window for a 2026 conclusion is “extremely narrow and only getting narrower.”

Prediction market traders have become similarly pessimistic. Polymarket’s odds of the act passing into law this year stood at just 16% ahead of the vote, having fallen from 82% in February. Now the market prices the probability at just 7%.

Layer One’s Kelvin Sparks was on the event floor yesterday to interview David Sutter, co-founder and CEO of OpenTrade, on what the legislative setback could mean for the future of stablecoins. Sutter said he was not particularly surprised by the vote’s failure, citing the scattered priorities of lawmakers ahead of the U.S. midterm elections.

As an infrastructure provider for third-party stablecoin yield, Sutter’s firm sits at the center of one of the debates left unresolved by the bill’s failure. The draft legislation included prohibitions that would prevent stablecoin issuers from paying yield on idle balances, but left the door open for activity-based incentives and third-party providers. “If they do pass this prohibition, it’s good for us, because that means all the yield needs to come to yield utility providers like OpenTrade,” Sutter said.

The banking lobby has pushed hard on this issue, arguing that allowing idle stablecoin rewards could result in significant deposit flight from traditional banks, potentially reducing their capacity to extend credit.

With Congress now unlikely to settle that debate in the immediate term, the issue could remain in limbo for some time yet. Earlier this week, analysts at Bernstein acknowledged in a note to clients that the stablecoin yield question remains open for now, meaning the existing rules on stablecoin yield established under last year’s GENIUS Act remain unchanged.

They also suggested that attention will now shift to the regulators, predicting “aggressive and swift” action from the SEC and CFTC to pick up the slack in areas such as token classification.

Both regulatory bodies have already signaled their readiness to push ahead with rulemaking this week. SEC Chair Paul Atkins asserted that “with or without legislation, we will act decisively within the SEC’s statutory authority to deliver certainty for American investors.”

For Sutter, none of this alters the longer-term trajectory. Having worked around stablecoins and tokenization for more than a decade, his view is that the industry simply has to keep building through the noise: “Prices go up, prices go down. [...] We’ve just been laser focused on building real products for real users.”

Podcast Recap: OpenTrade CEO cites bank lobby's $3 trillion deposit-flight warning

Last time on the podcast, we were joined by David Sutter, co-founder and CEO of OpenTrade, to discuss the evolving regulatory environment, institutional demand for DeFi and the rapid growth of stablecoins in emerging markets.

Subscribe to Layer One on YouTube, Apple, Spotify, or wherever you get your podcasts.

In the Headlines: The stories driving the conversation this week

• A group of seven Democratic senators said they remain committed to passing the Clarity Act despite voting against it this week. Describing Tuesday’s failed procedural vote as a setback, Sen. Kirsten Gillibrand and six Democratic colleagues said they would continue working across the aisle to reach an agreement. Senate Democrats unanimously opposed the latest version over unresolved ethics concerns.
• The blockchain infrastructure supporting the UAE’s national digital identity system is migrating to Avalanche. The UAEPASS Digital Vault allows users to store and securely share verified government documents, serving more than 12 million people across the country. This system will now migrate to a dedicated Avalanche L1 network, offering UAE authorities greater control over how the network operates.
• Aave unveiled a new real-world asset hub on Avalanche targeting institutional lending and borrowing. The new platform will allow certain tokenized assets, including securities, to be used as collateral for stablecoin loans. Founder Stani Kulechov added that, following the Clarity Act’s failed Senate vote, the DeFi industry may need to take the “Uber path” to adoption, meaning it must continue to grow until regulators are simply forced to catch up.

Top of the Charts: Monthly stablecoin transfer volumes briefly spiked above $10 trillion earlier this year

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Layer One is brought to you in collaboration with Avalanche.