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The White House has given negotiators until the end of February to resolve a dispute over stablecoin yields that threatens to sink landmark federal cryptocurrency legislation, according to participants in the talks.
Nearly a year into negotiations over the Digital Asset Market Clarity Act, banking groups and crypto firms remain deadlocked on whether regulated platforms should be allowed to offer interest-like rewards on stablecoin holdings.
The impasse has stalled what would be the first comprehensive federal framework for cryptocurrency trading and oversight.
The debate over stablecoin yield interest-like rewards paid to holders of dollar-pegged digital assets, has become the most contentious issue in drafting the crypto market bill.
Crypto companies argue yield offerings are essential for competitiveness and innovation, especially given decentralized finance’s rapid growth.
Banking groups counter that high yields on stablecoins could siphon deposits from traditional banks, threatening the funding of local lending and financial stability.
“We must ensure that any legislation supports the local lending to families and small businesses that drives economic growth and protects the safety and soundness of our financial system.”
A joint statement from U.S. banking organizations including the American Bankers Association and Independent Community Bankers of America.
Industry advocates, while acknowledging tensions, have signaled cautious optimism about progress.
Summer Mersinger, CEO of the Blockchain Association, said the Feb. 2 session was an important step forward in the effort to deliver bipartisan digital asset market structure legislation to the president’s desk.
Still, negotiators have given themselves a tight window to reconcile these differences.
According to participants familiar with talks, the White House has directed parties to hammer out compromise language on stablecoin yields by the end of February or risk further delays in the bill’s Senate consideration.
The legislative path for the CLARITY Act itself has shown mixed momentum. The Senate Agriculture Committee advanced a version of the market structure bill on a party-line vote, but Democrats uniformly opposed it.
The House previously passed its own version of the bill last year, but reconciling those texts with the Senate’s has proven difficult.
Key Senate committees have postponed markup hearings due to unresolved issues, notably stablecoin yield, regulatory authority splits between the Securities and Exchange Commission and the Commodity Futures Trading Commission.
Crypto exchange Coinbase’s leadership has at times been publicly embroiled in the debate. CEO Brian Armstrong has denied a full rift with the White House.
Armstrong told investors and industry observers that talks remain super constructive despite earlier reports of tension, and that the company is working on potential compromises, including ideas involving community banks.
Yet withdrawing support for the bill’s current draft over its treatment of stablecoin rewards briefly rattled confidence among stakeholders and underscored the delicate balance required to satisfy both financial incumbents and digital-asset innovators.
With midterm elections on the horizon and limited legislative days left in the current session, the window to pass the crypto market structure bill this cycle is narrowing.
White House negotiators and industry representatives say talks will continue at working-group levels through February, but without a clear compromise on the stablecoin yield framework, the legislation risks further delay or collapse.
