The ongoing debate over stablecoin yields in the U.S. Senate has intensified following a recent meeting between Wall Street bankers and crypto executives at the White House. The bankers have firmly opposed any form of yield or rewards associated with stablecoins, arguing that such incentives could jeopardize the integrity of the U.S. banking system.
During the meeting, which aimed to foster compromise, bankers presented a document titled “Yield and Interest Prohibition Principles,” outlining their stance against stablecoin rewards. In response, the Digital Chamber, representing the crypto industry, circulated its own principles advocating for the inclusion of certain rewards in the Senate Banking Committee’s draft bill.
Digital Chamber CEO Cody Carbone emphasized the necessity of rewards for stablecoin users, stating that the industry is willing to compromise on aspects that resemble traditional interest payments for static holdings. He expressed hope that this new position could reignite stalled negotiations, which have been at a standstill since a disagreement derailed a previous hearing on the bill.
Carbone noted that while the crypto sector is working under the framework established by last year’s Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, bankers are pushing for amendments through the proposed Digital Asset Market Clarity Act. He highlighted that the GENIUS Act remains the current law, and the crypto industry should still be able to offer rewards linked to user transactions and activities.
“If they don’t negotiate, then the status quo is that just rewards continue as-is,” Carbone remarked, indicating that the crypto group’s diverse membership could facilitate more productive discussions. He urged bankers to return to the negotiating table, stressing that a blanket prohibition would lead to stagnation.
The Digital Chamber’s recent principles specifically protect rewards associated with liquidity provision and ecosystem participation, which they argue are vital for decentralized finance (DeFi). The White House has called for a resolution by the end of the month, although bankers have remained steadfast in their position during prior meetings.
Patrick Witt, a crypto adviser to former President Donald Trump, indicated that further discussions might be scheduled soon, expressing optimism about finding common ground. He noted that the Clarity Act should not be primarily focused on stablecoins, as this issue was more appropriately addressed in the GENIUS Act. Witt advocated for a precise approach to resolving the narrower issue of idle yield.
The Senate Agriculture Committee has already passed its version of the Clarity Act, which emphasizes commodities, while the Banking Committee’s version focuses on securities. For the bill to progress, it will require bipartisan support, particularly from Democrats, to meet the Senate’s 60-vote threshold.
The clash between bankers and crypto executives over stablecoin yields continues as both sides present their principles amid ongoing legislative negotiations. With the White House urging a compromise, the future of stablecoin rewards hangs in the balance.