America’s biggest financial interests met at the White House to break a deadlock on the future of stablecoins in national law, but deep divisions remain over how much yield crypto issuers should be allowed to offer and how this could reshape the banking system.
Washington DC – Top executives from crypto firms and major banking groups gathered this week at the Heart of U.S. government to try to bridge longstanding differences on a key sticking point in proposed digital asset legislation. The White House meeting was touted as a step toward progress, but negotiators from both sides left without a clear agreement on stablecoin yield rules that have blocked momentum in the Senate’s market structure bill.
Crypto industry leaders say the talks showed willingness to engage, but banks are not yet ready to compromise on yield language, leaving a legislative impasse that could delay the future of U.S. digital asset regulation.
Deep Divide Over Stablecoin Yield and Banking Risks
Stablecoins are digital assets designed to maintain a steady value by being pegged to fiat currencies like the U.S. dollar. These tokens — with more than $300 billion in market value — have become central to decentralized finance and crypto trading.
The main conflict at the meeting was over whether stablecoins should be allowed to pay yield or interest. Blockchain advocates argue that allowing yield is key to competition and innovation. Banks, however, warn that high yields on crypto could pull deposits away from traditional savings and checking accounts, threatening the health of the broader financial system.
Representatives from the American Bankers Association, Bank Policy Institute, Consumer Bankers Association, Financial Services Forum and Independent Community Bankers of America issued a joint statement after the talks. They emphasized the need for any legislation to support local lending and protect financial stability, reiterating their stance that stablecoin yield provisions must be carefully regulated.
Analysts warn that if stablecoin yield provisions remain unrestricted, banks could lose enormous amounts of retail deposits. A study cited by banking groups projects potential outflows of up to $500 billion to $1 trillion by 2028 from traditional accounts if crypto interest competition grows unchecked.
White House Sets Push For Deal By End of Month
Despite the absence of a breakthrough, the White House reportedly instructed both sides to find a workable compromise on the contentious stablecoin yield question by the end of February. Sources familiar with the closed-door session said the administration wants technical agreement on language that might also attract Democratic support in Congress.
This deadline adds urgency to the negotiations. Leadership in the Senate Banking Committee had planned to move the market structure bill forward, but delays caused by disagreements — especially after crypto exchange Coinbase pulled support over stablecoin provisions — have slowed progress.
President Trump, who has championed clearer digital asset rules as part of broader financial innovation goals, hosts these cross-sector talks to spur practical progress and avoid a complete legislative stalemate.
What Each Side Wants From Regulation
Crypto industry advocates want to ensure that digital asset legislation does not unfairly limit competition or innovation. They argue that yield-bearing stablecoins could offer consumers better choices, and overly restrictive rules might push growth to offshore markets or informal sectors.
Some crypto firms say the Stablecoin Genius Act, a 2025 law establishing reserve and transparency requirements for payment stablecoins, went a long way toward consumer protection but that yield remains a crucial issue for market viability.
Banks counter that the current draft legislation has gaps that would let third parties effectively offer interest on stablecoins, bypassing regulatory intent and posing safety risks. They want language that closes that loophole and ensures yield-bearing crypto products are held to the same standards as traditional financial instruments.
Industry insiders observe a fundamental tension: the need to protect consumers and the financial system while fostering innovation in digital finance. Finding that balance is proving difficult.
Stakes for the U.S. Financial System
Lawmakers and regulators have watched stablecoin adoption increase rapidly. Stablecoin usage is not only tied to crypto trading — it is also increasingly used for payments and cross-border transactions, raising questions about the future of money and monetary policy.
Financial authorities fear that unrestricted yield could lead to rapid deposit flight, pushing consumers and businesses toward crypto alternatives in ways that diminish banks’ ability to support lending and credit creation.
At the same time, some experts argue that resisting these changes completely may stifle technological progress, and that adaptation — rather than exclusion — could benefit both sectors in the long term.
Next Steps Toward Legislation
The next key milestone is advancing the crypto market structure bill through the Senate Banking Committee. But the committee recently postponed voting as negotiators work to refine contentious provisions, especially around stablecoins, tokenized assets, and decentralized finance safeguards.
Both banking and crypto groups acknowledge the importance of continued dialogue. Additional working sessions and follow-ups with lawmakers are likely as the February deadline approaches.
As negotiations continue, markets remain sensitive to both political signals and industry sentiment. Crypto prices have seen volatility amid regulatory uncertainty, further underscoring how deeply policy decisions can affect investors and institutions alike.
Leaders on all sides say they recognize the national and global importance of stablecoin legislation. But agreement on yield and risk management remains the central path they must walk before Congress can deliver cohesive digital asset policy.
