Banks Dig In: No Deal on Stablecoin Yields at Tense White House Crypto Bill Meeting

Introduction: A Standoff in the Heart of Washington

Crypto leaders walked into the White House full of hope for a breakthrough. They wanted to find a middle ground on in a key crypto bill. But banks showed up with tough demands. They pushed hard for a full ban on these rewards. This clash happened in the latest meeting on the Digital Asset Market Clarity Act. It shows how deep the divide runs between traditional banks and the crypto world.

What Went Down at the White House Meeting

On Tuesday, top crypto execs met with bankers at the White House. The goal was to hammer out a deal on stablecoin rewards. These are interest-like payouts that crypto platforms offer to users holding stablecoins. Stablecoins are digital dollars pegged to the US dollar, like USDC or USDT.

Crypto reps came ready to compromise. But bankers stuck to their guns. They shared a document calling for a total ban. It would block any rewards – cash or non-cash – for holding stablecoins. The ban would cover buying, using, owning, or keeping these assets.

This was the second White House meeting on the issue. The first one last week also ended in a deadlock. White House officials tried to keep groups small to speed things up. But no big progress came.

Who Was in the Room?

• Crypto side: Execs from Coinbase, Ripple, a16z (Andreessen Horowitz), Crypto Council for Innovation (CCI), and Blockchain Association.
• Banking side: Groups like Bank Policy Institute and American Bankers Association.
• Leaders: Patrick Witt, crypto adviser to President Trump, ran the talks.

After the meeting, both sides put out positive statements. Blockchain Association CEO Summer Mersinger said: “We’re encouraged by the progress as stakeholders remain constructively engaged.” CCI CEO Ji Kim added: “The important work continues, and we appreciate the banking industry’s engagement.”

Banks kept it vague. They said any framework must support innovation but protect bank safety and local lending.

Why Banks Hate

Banks see stablecoin rewards as a threat. They worry users will pull money from bank accounts to chase higher crypto yields. This could cause “deposit flight.” Banks use deposits to fund loans for homes, businesses, and Main Street.

Their document demands regulators enforce the ban. It also calls for a study on how stablecoins affect bank deposits. Bankers fear losing the core of their business.

Crypto’s Side: Why Yields Matter

For crypto firms, yields are a big part of their model. Platforms like Coinbase earn from them. Banning yields could hurt user growth and innovation. Crypto groups argue stablecoins boost payments and finance without replacing banks.

This fight blocks the Senate Banking Committee from moving the bill forward. The Digital Asset Market Clarity Act aims to clarify rules for digital assets. It passed the House last year and cleared the Senate Agriculture Committee. But Banking Committee approval is stuck.

Other Roadblocks in the Crypto Bill

aren’t the only issue. Democrats want:

• A ban on senior officials deeply involved in crypto. This targets President Trump’s personal crypto holdings.
• Stronger rules against crypto use in crime and money laundering.
• Full staffing of the Commodity Futures Trading Commission (CFTC) with Democratic commissioners before it handles crypto.

Patrick Witt says the White House won’t back anything targeting the president. He predicts a deal soon.

Bigger Challenges Ahead

The Senate faces timing issues. Budget fights over Homeland Security funding eat up time. Floor time is scarce as midterms approach. Long breaks make it harder to pass big bills like this.

If talks fail, lawmakers take over. The bill needs a Banking Committee vote before Senate floor action.

Broader Crypto Politics: Fairshake PAC Jumps In

While DC stalls, crypto fights back in elections. Fairshake PAC, a top crypto fund, dropped $5 million into Alabama’s Senate primary. They’re backing pro-crypto Republican Barry Moore. This is their first big midterm move. It shows crypto’s push to shape Congress.

What Mean for You

If you’re a crypto user, yields make holding stablecoins worthwhile. A ban could push innovation overseas or kill features. For banks, it’s about survival. A compromise might limit yields or add safeguards.

Watch for updates. This bill could set crypto rules for years. Clear regs would boost the industry, attract investment, and protect users.

Outlook: Deal or Deadlock?

Two meetings, zero movement on yields. Pressure builds as elections near. Crypto has House wins and Ag Committee support. Banks hold sway in Banking Committee.

Trump’s team pushes for progress. But Democrats’ demands add hurdles. Expect more talks or a shift to Congress.

This highlights the crypto-banking war. Stablecoins grew fast – over $150 billion market cap. Regs must balance innovation and safety.

Final Thoughts

The path to crypto clarity is bumpy. Banks want to protect deposits. Crypto wants freedom to innovate. A deal needs give-and-take. Stay tuned – your wallet could feel the impact.

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