The current impasse over stablecoin yields in the US Senate’s cryptocurrency market structure bill is already written, with the crypto side standing firm on the need for some forms of rewards for stablecoin users.
A White House meeting between Wall Street bankers and cryptocurrency executives hit a wall this week, despite officials from President Donald Trump’s administration urging the parties to reach a compromise. The banks maintained their stance that no yield or reward from stablecoins is acceptable, arguing that such yields threaten the deposit activity at the heart of the US banking system, and explained their position in a one-page document titled “Yield and Interest Prohibition Principles.”
The Digital Chamber has drafted its own set of principles and began circulating them on Friday, arguing for the need for a section in the Senate Banking Committee bill that outlines a variety of situations in which rewards could be acceptable. The latest document, obtained by CoinDesk, also says that the bankers’ request for a two-year study on the effect of stablecoins on deposits is acceptable, as long as it does not come with automatic regulatory rule in response.
“We want policymakers to be aware of the fact that we believe this is a compromise,” Digital Chamber CEO Cody Carbone said in an interview Friday. With this document, the industry group is writing that it is willing to give ground on anything that looks like an interest payment on static stablecoin holdings, which would be more like a bank savings account.
While the crypto sector has been seeking stablecoin products permitted under last year’s National Innovation Guidance and Establishment for US Stablecoins (GENIUS) Act, bankers are trying to overturn that law with edits included in this pending Digital Asset Market Clarity Act. But the GENIUS Act represents the current law of the land, so Carbone suggested that his industry’s willingness to eliminate rewards for stablecoin holdings is an important concession, and that cryptocurrency companies should still be able to offer rewards when customers engage in transactions and other activities. The bankers should come back to the table to talk again, he said.
“If they don’t negotiate, then the status quo is that fair rewards continue as they are,” said Carbone, who suggested that his group’s broad membership – which includes banking members – may bring it closer to the center of the discussion. “If they don’t do anything and keep saying, ‘We just want a blanket ban,’ this won’t go anywhere.”
He hopes the House’s new position paper can reset negotiations that have stalled progress on the legislation since a last-minute disagreement derailed a hearing on the bill at the banking panel a month ago.
“Hopefully we can be the voice or the intermediary that helps drive this conversation forward once again, because we are the only business that represents both sides,” Carbone said.
Friday’s Digital Chamber principles highlighted two particular reward scenarios it wanted to protect: those tied to providing liquidity and those that encourage participation in the ecosystem. The group argued that those two provisions of Section 404 of the bill are especially important in decentralized finance (DeFi).
The White House is said to have called for a compromise by the end of this month. So far, the banking side has not appeared to budge in repeated meetings, although Trump’s crypto advisor Patrick Witt said in a Friday interview with Yahoo Finance that another meeting could be scheduled for next week.
“We are working hard to address the issues that have arisen,” Witt told Yahoo Finance, saying he has encouraged both sides to compromise on the details.
“It’s unfortunate that this has become such a big issue,” he said, because the Clarity Act is not really about stablecoins, which was more appropriately the business of the already passed GENIUS Act. “Let’s take a scalpel to this narrow issue of idle performance,” he added.
The Senate Agriculture Committee already passed its own version of the Clarity Act, which focused on the commodities side of the ledger, while the Senate Banking Committee’s version focuses more on securities. If the banking panel follows its agricultural counterparts, it will advance the bill along partisan lines. But if a final bill ultimately passes the entire Senate, it will need a lot of Democratic support to overcome the chamber’s 60-vote margin.
