White House session ends in impasse as banks demand restrictive parameters on stablecoin rewards

U.S. crypto and banking executives met at the White House today to discuss stablecoin yield, describing the talks as "productive" while acknowledging they failed to reach a definitive conclusion on the topic that has stalled the broader crypto market structure act.

The meeting marked the second in a series of closed-door discussions aimed at resolving ongoing disputes between the banking and cryptocurrency industries over paying rewards on stablecoin holdings. 

Banks have argued that allowing yields would drain deposits from traditional institutions and potentially cause liquidity issues, while crypto firms have said restricting such yields would stifle innovation.

Participants included key voices in crypto, such as Ripple, Coinbase, the Crypto Council for Innovation, and the Blockchain Association, as well as major banking institutions including Goldman Sachs, Citi, and JPMorgan Chase, alongside trade groups such as the American Bankers Association.

Hard line

Multiple attendees noted that banks took a hard line on stablecoin yield during the meeting. 

According to a document leaked to reporters, the banks laid out a set of "prohibition principles" on yield and interest, calling for a broad ban on any financial or non-financial benefits tied to holding, owning, or using payment stablecoins, with strict enforcement, anti-evasion measures, and tight restrictions on marketing or representations that could imply yields resemble deposits or insured interest.

This stance goes beyond the latest draft of the market structure bill, which would bar yields or interest for passive stablecoin holdings but would allow narrower, activity-based rewards or incentives.

Banks noted that any proposed exemptions to the stablecoin yield prohibition "must be extremely limited in scope."

One key source familiar with the matter told The Block that crypto stakeholders at the meeting strongly pushed back against many of these principles and "really dug in." 

"It seemed like there was a pretty strong and negative reaction from the crypto side on a lot of them, particularly like anti-evasion and enforcement and that kind of line of thinking," the source said.

The source told The Block that it's likely that the crypto and bank trade organizations will next figure out details, while saying they were unsure if there would be more meetings. Another source said it seemed like the "ball is back in [the] Senate Banking Committee's court."

Blockchain Association Executive Vice President Dan Spuller also made comments reflecting this impasse.

"Banks did not come to negotiate from the bill text, instead arriving with broad prohibitive principles, which remains a key disagreement," Spuller wrote on X, adding that today's meeting was a "smaller, more focused session."

Optimism

Despite lingering disagreements, key crypto attendees expressed optimism about the future of the market structure act, which would establish crypto regulatory boundaries between the Securities and Exchange Commission and the Commodity Futures Trading Commission.

"Productive session at the White House today — compromise is in the air," said Stuart Alderoty, chief legal officer at Ripple. "Clear, bipartisan momentum remains behind sensible crypto market structure legislation."

Coinbase Chief Legal Officer Paul Grewal also commented on X that the meeting made progress. "There's still more work to do for sure," Grewal said.