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High-stakes negotiations between banking executives and crypto industry leaders collapsed Monday at the White House, with both sides unable to agree on whether stablecoin holders should earn yield on their digital assets.
The impasse threatens to derail the Digital Asset Market Clarity Act and leaves the regulatory future of the $200+ billion stablecoin market in limbo.
Despite characterizing the discussions as productive, negotiators left without a compromise, leaving comprehensive digital asset legislation in flux and raising fresh questions about the future of the Digital Asset Market Clarity Act and crypto regulation.
The impasse centred on a single but politically combustible question: whether stablecoin holders should be permitted to earn yield or rewards on their holdings, a financial incentive offered today by many crypto platforms.
Legacy banks argued these rewards resemble interest on deposits, a product traditionally regulated within the banking system. Permitting them outside that system, they say, could siphon off deposits from banks, weaken lending capacity, and pose risks to financial stability.
By contrast, crypto firms from exchanges like Coinbase to issuers such as Circle and legal representatives from Ripple insisted that yield is a core feature of blockchain markets and that overly restrictive rules would stifle innovation and lock out U.S. firms from global competition.
“Productive session at the White House today, compromise is in the air. Clear, bipartisan momentum remains behind sensible crypto market structure legislation.”
Stuart Alderoty, chief legal officer at Ripple signalling, was optimistic even as talks broke off without agreement.
Banking groups, meanwhile, reiterated concerns that unchecked yield offerings could cripple the traditional financial system.
In a joint statement, the American Bankers Association stressed the need for any legislation to support local lending to families and small businesses that drives economic growth.
The meeting was part of the Trump administration’s effort to break a months-long stalemate over the CLARITY Act, a bill intended to define federal oversight of digital assets.
It was also to delineate roles for the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).
The House passed the act in July 2025, but significant amendments in the Senate, especially around stablecoin yield provisions, have stalled progress in the Senate Banking Committee.
Stablecoins serve as the plumbing for much of the crypto economy, providing liquidity and acting as a dollar substitute in decentralized finance (DeFi), trading, and payments.
If lawmakers fail to resolve the regulatory status of these instruments, the resulting uncertainty could deter institutional investment and push innovation offshore, outcomes many in the industry view as strategically damaging.
Banking representatives attended the meeting armed with what sources described as prohibitive principles, broad guidelines arguing that stablecoin holders should receive no financial or non-financial benefits akin to interest.
These positions differ sharply from both the status quo in crypto markets and the GENIUS Act, legislation passed in mid-2025 that already prohibits stablecoin issuers from paying interest directly but allows third-party platforms some flexibility.
Critics of the banking position say it misunderstands the mechanics of on-chain yields and risks dampening US innovation. Mike Belshe, CEO of BitGo, told reporters that the yield dispute should not be conflated with broader market structure legislation.
White House officials have reportedly asked both sides to propose compromise language on stablecoin yields by the end of February 2026 to prevent further delays.
Failure to do so could push meaningful crypto regulation into the next congressional session or beyond, prolonging a period of legal ambiguity that has already frustrated industry stakeholders on both sides of the aisle.
For policymakers and market participants, the significance of this deadlock extends beyond the technicalities of stablecoin mechanics. It underscores a broader tension in US financial policy.
