Crypto and Banks Clash Again at White House Over Stablecoin Rewards

TLDR

• White House held second meeting in two weeks between crypto and banking representatives to discuss stablecoin provisions in market structure bill
• Banking groups arrived with principles document calling for total ban on stablecoin yield payments instead of compromise proposals
• Crypto industry representatives from Coinbase, Ripple, a16z, and others expressed optimism despite lack of agreement
• Banks argue stablecoin yield payments threaten bank deposits and undermine the banking system
• Senate Banking Committee Digital Asset Market Clarity Act remains stalled over yield payment disagreement

The White House hosted its second meeting in two weeks between cryptocurrency and banking industry representatives. The goal was to reach an agreement on stablecoin provisions in pending market structure legislation. The meeting ended without a resolution.

President Donald Trump’s crypto advisers organized the Tuesday gathering. They instructed both sides to arrive ready to compromise. However, banking representatives brought a principles document calling for a complete ban on stablecoin yield payments.

The document obtained by CoinDesk proposed prohibiting “any form of financial or non-financial consideration” tied to stablecoin ownership. This stance disappointed crypto negotiators who came prepared to discuss potential compromises.

The crypto industry delegation included executives from major companies. Coinbase, Ripple, a16z, the Crypto Council for Innovation, and the Blockchain Association sent representatives. The White House reduced the number of participants from the previous week’s larger gathering.

Banking Industry’s Position

The banking groups argue that stablecoin yield payments pose risks to traditional bank deposits. They claim these payments could drive customers away from banks. This deposit flight could reduce funds available for community lending and economic activity.

Crypto Industry Response

BitGo CEO Mike Belshe suggested both sides should stop revisiting the GENIUS Act. That earlier legislation banned stablecoin issuers from paying yield directly. He argued the market structure bill should move forward separately from yield payment debates.

Legislative Background

Congress is working to pass comprehensive crypto market structure legislation. The House of Representatives passed the CLARITY Act in July. However, the Senate Banking Committee has not secured enough bipartisan support to advance similar legislation.

The effort lost momentum last month when Coinbase withdrew its support. The exchange opposed provisions prohibiting all yield payments tied to stablecoins. This disagreement has become the main obstacle to advancing the Digital Asset Market Clarity Act.

White House crypto adviser Patrick Witt led both recent meetings. He described the first gathering on February 2 as “constructive” and “fact-based.” Witt has predicted negotiators will find common ground soon.

The Senate faces additional challenges beyond policy disputes. The chamber is dealing with budget issues, including funding for the Department of Homeland Security. Senate Democrats have also demanded provisions addressing government officials’ crypto involvement and stronger protections against illicit finance.

The Senate Banking Committee needs a majority vote before the full Senate can consider the legislation. Time is running short as the chamber approaches lengthy breaks before midterm elections. Banking representatives maintained their position against stablecoin yield payments at Tuesday’s meeting.

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