Time is running out for the crypto bill

No clarity on CLARITY
August! Everybody's down the shore or in the Hamptons or somewhere that is not New York City (which paradoxically makes it the best time to be in New York).

With everybody relaxing during the dog days, will anything happen? Well, Congress is about to go off on its extended summer vacation. Lawmakers are in town through Thursday and that's it. Which means there is precious little time for anything else to get done, such as the crypto bill, as our Claire Williams explained.

The CLARITY bill has been batted around Congress for a year and is now being held up over something I'm quite sure is unique in our history: a provision in the bill that would bar any elected official from issuing their own digital asset. Beyond that, the enforcement mechanism would be put in the hands of the Department of Justice, which is currently under the aegis of a man who has already issued digital assets. Even more wild, the prohibition would expire in 2029. 

It's not impossible that the bill could be voted on and passed in the fall, but the midterms are going to be blocking out the sun on anything not election-related. So there is a sense it's this week or back to the drawing board. And for the banking industry, it still isn't clear that the provisions bankers want – mainly blocking crypto firms from offering interest on deposits – will be included in the final bill. 

Like I have said before, the crypto industry needs this bill a lot more than the banking industry does, and I imagine there's more than one banker out there who'd be happy to see the whole thing disappear into the Washington sausage maker. 

Lack of situational awareness
Then there is everything going on in the exciting world of AI, and I'm not talking about Sam Altman's bizarre suggestion that you feed your kids' recreation calendars into Chat GPT so it can tell you how well Timmy did in Saturday's soccer game. I'm talking about Situational Awareness, the hedge fund that launched two years ago, garnered billions from over-eager investors, and crashed hard in July, falling 67%. 

Situational Awareness's travails are less systemic and more illustrative. I've written a few times about the AI capex boom and the pressure it is putting on both the tech industry and the markets. You cannot spend $1 trillion a year without incredibly high demands for a return on those assets. The revenue needed from AI is just as astounding as the trillions poured into building out the data centers. But as we have seen in banking, companies are figuring out ways to get AI without breaking the, er, bank, so to speak. And that's to say nothing of the groundswell of local opposition to new data centers.

Situational Awareness – and the irony of that name is not lost on me, though I suspect it was lost on its young founder – seems to have been built entirely around the idea that the AI capex boom would be a one-way ride higher.

Read more:

• Should a bank ever be liable when a customer gets scammed?
• OpenAI models' Hugging Face breach is a red flag for bankers
• The top-performing banks with $2B to $10B of assets in 2025
• Inside Upstart's journey to get a bank charter approval

COBOL and crypto
Over the weekend, I picked up a pizza from our local place. We ordered through their website, which we usually do but recently had been having trouble with. The guy who runs the place explained to me they tried a new system, it didn't work, and they had to go back to the old system. It took about a day to put in the new system, a couple of weeks to realize it didn't work well, and less time to go back to the old system. I don't know how many orders it cost them; I do know at one point we ordered somewhere else out of frustration (don't tell them). The system is working well now and we are again happily ordering my son's favorite pizza. 

This is one store, with a couple of cash registers, a few phones, and probably one central computer. That is nothing compared to the complexity of upgrading banking systems. Here at American Banker we are hosting the Small Business Banking Summit, a live online event on Aug. 6 that will look at that complexity for small banks. Industry executives will look at every part of the financial operating systems for small banks and look at how it can be improved and fixed and hardened for the 21st century.