Crypto Advocates Launch to Counter Wall Street in Key U.S. Senate Bill Fight

A major clash is brewing in Washington over how stablecoins should work in the U.S. economy. Wall Street banks want to block all rewards or yields on stablecoins. But crypto groups are pushing back hard with their own set of rules. This fight is holding up a big Senate bill on crypto markets.

The Sticking Point: Stablecoin Yields and Rewards

Stablecoins are digital dollars that hold steady value. They power trading, payments, and apps in crypto and DeFi. The debate centers on whether users can earn rewards for holding or using them.

Banks say any yield on stablecoins hurts their core business. They fear people will pull money from bank savings accounts to chase crypto rewards. This week, top bankers met with crypto leaders at the White House. Officials from President Trump’s team pushed for a deal. But no luck. Banks stuck to their guns.

Bankers released a short paper called “Yield and Interest Prohibition Principles.” It calls for a total ban on stablecoin yields. They see it as a direct threat to U.S. banking.

Crypto’s Strong Response: Digital Chamber’s Principles

The crypto side did not back down. The Digital Chamber, a key industry group, fired back with its own . They shared the document on Friday. It backs parts of the Senate Banking Committee’s draft bill. That bill lists cases where rewards make sense.

The Digital Chamber agrees to a two-year study on how stablecoins affect bank deposits. But they draw a line: no automatic new rules from the study.

“We want to make the case known for policymakers that we do think this is a compromise,” said Cody Carbone, CEO of the Digital Chamber.

Carbone explained their offer. Crypto firms would drop rewards on idle stablecoin holdings. That looks too much like bank interest. But they want to keep rewards for active use, like transactions or lending.

Why This Matters: GENIUS Act vs. New Bill

Last year, the GENIUS Act set rules for U.S. stablecoins. It allows some reward products. Now, banks want to roll that back through the Digital Asset Market Clarity Act. This new bill aims to clarify crypto rules overall.

Carbone calls dropping idle rewards a big give. “If they don’t negotiate, then the status quo is that rewards continue as-is,” he said. The Digital Chamber has banks in its membership too. This puts them in the middle.

The group spotlights two key rewards in the bill’s Section 404:

• Rewards for providing liquidity in DeFi pools.
• Rewards for joining ecosystem activities, like staking or governance.

These fuel DeFi growth. Banning them could slow innovation.

Stalled Talks and Next Steps

Negotiations froze after a dispute killed a Senate Banking hearing last month. The Digital Chamber hopes their paper restarts talks. “We are the one trade that represents both sides,” Carbone said.

The White House wants a deal by month’s end. Bankers have not moved much. But Patrick Witt, a Trump crypto advisor, sees hope. He told media another meeting might happen next week.

“We’re working hard to address the issues… Let’s use a scalpel here to address this narrow issue of idle yield,” Witt said.

Witt notes the Clarity Act focuses on markets, not stablecoins. The GENIUS Act already covers that.

Senate Path Forward

The Senate Agriculture Committee passed its Clarity Act version. It eyes commodities. Banking’s version targets securities. Banking could push ahead on party lines. But full Senate needs 60 votes. That means Democrats must join.

A compromise could speed U.S. crypto rules. Without it, delays hurt everyone. Clear laws boost investor trust and growth.

Broader Impacts on Crypto and DeFi

This fight shapes stablecoin future. Rewards drive use in DeFi. Liquidity providers earn fees. Users get incentives to build. A full ban could push activity offshore.

U.S. leadership matters. Other countries watch. For example, a U.S. DeFi group urged the UK’s FCA to avoid over-regulating developers. They say non-custodial protocols should not count as middlemen.

Global rules need balance. Too strict, and innovation flees. Too loose, and risks grow.

What to Watch Next

• Next White House meeting details.
• Bankers’ reply to Digital Chamber principles.
• Senate Banking hearing timeline.
• Any GENIUS Act changes.

Stay tuned. This could unlock billions in stablecoin activity. It tests if crypto and traditional finance can coexist.

Why Stablecoins Need Smart Rules

Stablecoins hit $150 billion market cap. They enable fast, cheap transfers. Rewards make them sticky. But banks worry about deposit flight. Data shows little impact so far. A study could prove that.

Compromise wins. Allow activity-based rewards. Ban idle yields. This protects banks while growing crypto.

The Digital Chamber’s move shows maturity. Crypto is ready to negotiate. Wall Street should too. A deal benefits the whole economy.

What do you think? Will banks budge? Share in comments.

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