The White House reportedly took the lead during the latest Crypto Council meeting, narrowing the stablecoin rewards dispute that has delayed progress in the long-awaited crypto market structure bill.
White House Steps In On CLARITY Act DisputeOn Thursday, the White House held another meeting between the crypto industry and the banking sector to negotiate the stablecoin yield dispute that has stalled the crypto market structure bill, known as the CLARITY Act, over the past month.
Meanwhile, no individual bank representatives attended; bank voices were represented through trade associations, such as the American Bankers Association, the Banking Policy Institute (BPI), and the Independent Community Bankers of America (ICBA).
Terret sources affirmed that there was a notable difference in yesterday’s meeting as the White House “took the lead in driving the discussion, rather than letting crypto firms and bank trades steer the discussion, as in prior meetings.”
For context, banks have heavily criticized the landmark stablecoin legislation, the GENIUS Act, due to “loopholes” that could pose risks to the financial system. The framework prohibits interest payments on the holding or use of payment-purpose stablecoins, but it only addresses issuers.
To address these concerns, banking associations across the US urged senators to include language in the CLARITY Act that also bans digital asset exchanges, brokers, dealers, and related entities from offering yield on stablecoins.
The Senate Banking Committee’s draft proposed that issuers offer rewards for specific actions, such as account openings and cashback. However, it also prohibited issuers from providing interest payments to passive token holders.
Stablecoin Yield Out Of The PictureAt the Thursday meeting, Patrick Witt, executive director of the US President’s Council of Advisors on Digital Assets, reportedly brought a draft text that served as the anchor for the discussion. Sources in the room told Terret that the draft’s language acknowledged banks’ concerns raised in last week’s “Yield and Interest Prohibitions Principles” document.
Based on this, “earning yield on idle balances (…) is effectively off the table,” the journalist affirmed. The draft also clarified that any future restrictions on rewards would be narrow in scope. Therefore, the debate has now narrowed to whether crypto firms can offer rewards linked to specific activities.
They also noted that the White House proposed anti-evasion language. The measure would give the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and the Department of the Treasury authority to enforce a ban on paying yield on idle stablecoin balances, and penalties of up to $500,000 per violation, per day, against companies that breach the ban.
