Banks Take Hard Line on Stablecoin Yields as White House Talks Stall
Banks and crypto executives met once more on the White House this week to settle a dispute over stablecoin rewards, however the talks ended with out settlement forward of a March 1 deadline set by the administration.
The standoff facilities on whether or not crypto companies can provide yield on dollar-pegged tokens with out draining deposits from conventional banks.
White House Talks Narrow Gaps But Yield Ban Remains Sticking Point
Details from the closed-door assembly have been first shared on X by journalist Eleanor Terrett, who cited banking and crypto sources current within the room. According to her, individuals described the session as “productive,” although no compromise was reached.
She added that banking teams arrived with a written set of “yield and curiosity prohibition rules.” The doc argued that cost stablecoins, as outlined within the GENIUS Act, have been designed strictly as cost devices, not interest-bearing merchandise. It additionally referred to as for a broad ban on “any type of monetary or non-financial consideration” tied to holding or utilizing a cost stablecoin.
The handout permits for less than extraordinarily restricted exemptions and warns in opposition to deposit flight that might cut back credit score availability for communities. It additionally proposed civil penalties for violations and strict guidelines in opposition to advertising stablecoins as deposits or FDIC-insured merchandise.
One banking concession, based on Terrett’s sources, was the inclusion of language permitting for “any proposed exemption,” a shift from earlier refusals to debate carve-outs in any respect.
Still, the scope of permissible actions stays disputed, with crypto companies pushing for broader definitions that will let platforms reward customers below sure situations, whereas banks need these definitions drawn extra narrowly.
The assembly was led by Patrick Witt, govt director of the President’s Crypto Council. Attendees included Coinbase Chief Legal Officer Paul Grewal, Ripple’s Stuart Alderoty, a16z’s Miles Jennings, and representatives from Paxos and the Blockchain Association.
Major banks current included JPMorgan, Goldman Sachs, Bank of America, Citi, Wells Fargo, PNC, and U.S. Bank, together with commerce teams such as the American Bankers Association.
Alderoty later wrote on X that “compromise is within the air,” although others described the end result as unresolved. Further discussions are anticipated within the coming days, though it’s unclear whether or not one other White House assembly will happen earlier than the deadline.
Deposit Fears Shaping the Broader Legislative Fight
The yield debate is unfolding in opposition to a wider push to cross a long-delayed crypto market construction invoice. Last week, crypto companies floated concessions, together with sharing stablecoin reserves with group banks or permitting them to subject their very own tokens, in an effort to ease opposition.
However, banks argue that yield-bearing stablecoins might pull funds from checking and financial savings accounts, weakening a main supply of lending capital. Analyst Geoff Kendrick warned that stablecoins might draw as much as $500 billion in deposits from banks in industrialized nations by 2028.
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