Crypto industry negotiators arrived at the White House on Tuesday ready to talk about a legislative deal on stablecoin yields, but their banking counterparts were not yet ready to reach a compromise on the Senate crypto market structure bill, according to a person familiar with the talks.
The fight over whether stablecoins should be able to offer rewards – a lobbying battle between Wall Street bankers and crypto experts – is one of the main obstacles preventing the Senate Banking Committee from advancing the Digital Asset Market Clarity Act. It’s been a sticking point for months, and the banking side held firm on banning rewards activity and more, the person said, despite the White House’s insistence last week that both sides had ideas for a deal.
The crypto team at the table was said to include executives from Coinbase, Ripple, a16z, the Crypto Council for Innovation and the Blockchain Association, according to people familiar with the plans. The White House attempted to reduce the number of participants in the most recent meeting held last week, which had failed to produce significant progress on the issue of stablecoin rewards programs that are a key component of crypto platforms’ business models.
Despite the lack of major progress, cryptocurrency representatives struck a hopeful note in their statements about the meeting.
“We are encouraged by the progress being made as stakeholders continue to engage constructively to resolve outstanding issues,” said Blockchain Association CEO Summer Mersinger, who was said to participate in the meeting.
“Important work continues,” Ji Kim, chief executive of CCI, said in a statement after the meeting, saying his group “appreciates the banking industry for its continued commitment.”
Banking groups involved in the meeting, including the Bank Policy Institute and the American Bankers Association, issued a statement after the meeting, although they did not include details about next steps on the legislation.
“As we noted during the meeting, such a framework can and should encompass financial innovation without undermining safety and soundness, and without putting at risk the bank deposits that fuel local lending and drive economic activity,” the group said in the combined statement.
Before the Senate can pass a bill, the banking panel must approve it by a majority vote. The legislation already has the necessary support from the Senate Agriculture Committee, and a similar bill with the same name won a vote in the House of Representatives last year. But bankers have raised concerns about stablecoin returns and rewards threatening the deposit business at the heart of their industry.
However, the performance of the stablecoin was not the only major obstacle. Senate Democratic negotiators have demanded that the effort include a ban on deep involvement in cryptocurrencies by senior government officials, driven primarily by President Donald Trump’s personal crypto interests. Democratic lawmakers have also insisted on greater protections against the use of cryptocurrencies in illicit finance and also that the Commodity Futures Trading Commission have full commissioners, including Democratic appointees, before it can begin work on cryptocurrency regulations.
While Trump’s crypto advisor Patrick Witt predicted that negotiators will find common ground soon, he also told CoinDesk that the White House will not support an effort aimed at the president. Witt was said to lead Tuesday’s meeting, as he did last week.
The Clarity Act faces a number of practical challenges beyond the political wrangling, including ongoing Senate friction over one last outstanding budget issue: funding for the Department of Homeland Security, which runs Immigration and Customs Enforcement (ICE). The Senate is always a tough place to get the time needed to pass legislation, and the closer the chamber gets to long recesses before this year’s midterm elections, the harder it will be to find enough time to handle a major cryptocurrency bill.
Read More: Crypto Industry, Banks Still No Close to Agreement on Stablecoin Performance at White House Meeting
UPDATE (February 10, 2025, 23:16 UTC): Adds comments from banking lobbyists.
