White House Talks Expose Deep Divide Between Banks and Crypto Firms Over Stablecoin Rewards
A White House–led effort to break the deadlock between U.S. banks and cryptocurrency firms over stablecoin rewards ended without an agreement on Monday, showing how entrenched industry divisions continue to stall sweeping digital-asset legislation in Congress.
The White House’s crypto policy team held a closed-door meeting with senior representatives from both the banking sector and the crypto industry. They discussed one of the main issues blocking progress on federal crypto market rules: whether stablecoins or related platforms should be allowed to offer rewards similar to interest to users.
Participants said the discussion was productive but did not lead to a conclusion. A person familiar with the meeting said no compromise was reached, and the main disagreements remain after more than two hours of talks.
Stablecoin rewards at the center of the dispute
The main issue is how the proposed Clarity Act, which aims to create clear federal rules for digital assets, should handle rewards paid on stablecoins. Traditional banks want strict rules banning these incentives. They argue that stablecoins offering rewards could take deposits away from insured banks and weaken the funding that supports consumer and small-business loans.
Crypto firms and advocacy groups say rewards are important for attracting users and competing with banks and fintech companies. They argue that banning rewards, especially those offered by third-party platforms instead of stablecoin issuers, would make it harder for digital-asset companies to compete and would slow innovation in the U.S.
The disagreement has already slowed progress on legislation. Last month, the Senate Banking Committee delayed a planned review of the Clarity Act because of growing resistance from both industries and concerns that there were not enough votes to move the bill forward.
Who was in the room
Monday’s meeting included representatives from major banking and crypto trade groups, including the American Bankers Association, the Independent Community Bankers of America, the Blockchain Association and the Digital Chamber. Executives linked to large crypto platforms, including Coinbase, also took part through industry representation.
The session was led by Patrick Witt, a senior adviser on the President’s Council of Advisors for Digital Assets. Industry sources said the White House intends to continue mediating, with follow-up meetings planned in a smaller format focused on drafting concrete legislative language.
A White House spokesperson did not respond to a request for comment.
“Constructive,” but no breakthrough
Publicly, both sides struck an optimistic tone. Blockchain Association CEO Summer Mersinger described the meeting as “an important step forward” toward bipartisan legislation, praising the administration for convening stakeholders to address one of the final obstacles to progress.
Similarly, Digital Chamber CEO Cody Carbone said the talks represented “exactly the kind of engagement needed” to keep market structure legislation moving, even though no final agreement was reached.
Behind the scenes, however, participants acknowledged the difficulty of closing the gap. One source familiar with the discussions said bank representatives appeared constrained by their member institutions and lacked flexibility to negotiate meaningful concessions on rewards.
“There was a lot of dialogue, but very little room to maneuver,” the source said, adding that the White House made clear it expects tangible progress before the end of February.
Legislative pressure builds
The timing is critical. While the House of Representatives passed its version of the Clarity Act in July, the Senate is still divided. The Senate Agriculture Committee advanced a bill last week focused on expanding the Commodity Futures Trading Commission’s role in supervising crypto markets, but it passed along party lines without Democratic support.
The more politically sensitive elements — including stablecoins, disclosure standards, and the division of authority between the Securities and Exchange Commission and the CFTC- fall under the jurisdiction of the Senate Banking Committee, where progress has been slower.
Banking groups continue to warn that poorly designed rules could threaten financial soundness. In a joint statement, the American Bankers Association and other industry groups said any legislation must preserve banks’ ability to fund local lending and protect the safety of the financial system.
Crypto advocates, meanwhile, argue that the issue of stablecoin rewards was already debated during last year’s passage of the GENIUS stablecoin law, which bars issuers from paying interest but does not prohibit rewards offered by independent platforms. They accuse banks of reopening settled questions to limit competition.
Markets watching closely
The policy uncertainty has spilled into markets. Bitcoin and other major cryptocurrencies fell sharply over the weekend before stabilizing modestly on Tuesday. Analysts say developments around market structure legislation could become a key catalyst for digital-asset prices in the weeks ahead.
For now, the White House appears committed to keeping both sides at the table. Whether that effort results in compromise - or further delay - could determine whether comprehensive U.S. crypto regulation finally moves forward this year.
