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White House seeks to curb stablecoin yields, bill stalls in Senate
Washington held a third round of talks between crypto executives, banking groups and administration officials as lawmakers work on comprehensive digital asset legislation. Disagreement over stablecoin rewards remains key obstacle preventing Senate vote.
Administration has floated compromise that would allow platforms to offer incentives tied only to transaction activity, not passive yield on idle balances. No agreement was reached, though participants described discussions as constructive, Cointelegraph reported.
Senate push faces resistance
Meeting marked third negotiation session in just over two weeks. House of Representatives has already passed similar framework under CLARITY Act, but Senate version has yet to secure bipartisan backing.White House crypto adviser Patrick Witt proposed narrowing reward structures so exchanges could compensate users only for payment activity. Yield on stored balances would effectively be excluded.
Executives from Ripple and Coinbase said talks were substantive and showed progress toward workable framework.
Banks warn over deposit competition
Banking associations argue interest-bearing stablecoins could compete directly with traditional deposits. US Treasury has previously estimated large-scale adoption could shift up to $6 trillion from banking system.One participant said competitive pressure, rather than systemic risk, appears to be primary concern for lenders.
Market implications
Limiting rewards to transactional use would force many crypto platforms to pivot away from passive income models toward payments-driven revenue. That could accelerate use of stablecoins as settlement tools rather than savings instruments.For banks, proposal may ease pressure on deposit base but intensify competition around speed, cost and user experience.
Outcome of negotiations is likely to shape direction of US digital asset regulation and determine how far integration between traditional finance and crypto markets will go.
We previously wrote that the head of the SEC called the United States the leader in the crypto market and supported the CLARITY Act.
This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.
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