STABLECOIN YIELD EFFECTIVELY OFF THE TABLE AS WHITE HOUSE TAKES CONTROL OF TALKS
Sources say today’s stablecoin meeting was smaller than last week and included representatives from Coinbase, Ripple, a16z, and major crypto trade groups. No individual banks attended. Bank interests were represented through national banking associations.
Public messaging from attendees was once again described as “productive” and “constructive.”
But sources say there was a notable shift. The White House led the discussion directly, rather than allowing crypto firms and banking trade groups to steer the agenda as in prior meetings.
The White House Crypto Council Executive Director brought draft legislative text that became the focal point of the conversation. The draft acknowledged bank concerns raised in last week’s yield and interest prohibition principles document, while signaling that any future restrictions on rewards would be narrow in scope.
However, earning yield on idle stablecoin balances appears to be off the table. The savings account style model is effectively dead.
The debate has now narrowed to whether firms can offer rewards only when tied to specific activities such as lending or structured use cases.
One crypto-side attendee said bank resistance appears driven more by competitive pressure than fears of deposit flight, which had been the original concern.
A bank-side source said trade groups are still pushing to include a formal deposit outflow study examining whether payment stablecoins could reduce traditional bank deposits.
The draft text would grant enforcement authority to the SEC, Treasury, and CFTC to police a ban on idle balance yield, with civil penalties of up to $500,000 per violation per day.
Bank trade groups will now brief members and assess whether compromise is possible on activity based rewards. Talks are expected to continue in the coming days.
Sources say an end of month agreement is realistic.
The White House has set a March 1 deadline to move the broader crypto market structure bill forward.
Despite the yield restrictions, the overall framework is still viewed by many as positive for the industry. It would clarify custody rules, exchange oversight, token classification, and the respective roles of the SEC and CFTC, reducing regulatory uncertainty that has limited institutional participation.
For crypto firms, clearer rules could unlock longer term capital, even if certain yield models are restricted.
