Short Description
The White House is mediating a critical standoff between banks and crypto firms over stablecoin interest rules, a key obstacle to passing landmark crypto legislation.
Read Time
2 minutes, 15 seconds
Main Article
The long-awaited CLARITY Act, designed to establish the first US comprehensive crypto market-structure framework, remains stalled in the Senate, with a contentious debate over stablecoin interest at its core. The White House is now stepping in, convening a meeting between top officials from the Trump administration, leading crypto companies, and major banking industry representatives. This high-level discussion aims to break the deadlock on whether third parties, like exchanges, should be allowed to offer rewards on stablecoin holdings, a provision fiercely contested by traditional financial institutions.
Banks, led by executives like Bank of America’s Brian Moynihan, are pushing for a strict prohibition, warning that interest-bearing stablecoins could trigger massive deposit flight—potentially up to $6 trillion—and create systemic risk to the US banking system. They argue this scenario mirrors an unregulated parallel banking sector. Conversely, crypto exchanges like Coinbase contend this is an anti-competitive move to stifle innovation and limit consumer choice in the growing digital asset economy. The industry is divided, however, with firms like Kraken and Ripple supporting the current Senate bill.
The outcome of these White House negotiations will have profound implications for the future of crypto regulation in the United States. The GENIUS Act of 2025 already bars issuers from paying yield, leaving a regulatory gap for intermediaries. A compromise is essential to revive the CLARITY Act, which seeks to clarify the crucial jurisdictional divide between the SEC and CFTC. Without resolution, the legislative progress that the crypto sector has sought for years risks further indefinite delay, leaving the regulatory landscape fragmented and uncertain for both businesses and investors.
Short Summary
The fate of major US crypto legislation hinges on resolving the stablecoin yield debate. The White House is hosting urgent talks between banks and crypto firms to find common ground on the CLARITY Act. Banks warn of financial stability risks, while crypto companies see anti-competitive overreach. The outcome will shape the future of digital asset regulation and define the competitive landscape between traditional and decentralized finance.
