The White House is nearing a legislative compromise on stablecoin rewards following intensive closed-door negotiations between major cryptocurrency firms and traditional banking representatives. According to reports from Crypto in America, the gap between the two sides has "shrunk considerably" according to White House Crypto Council Executive Director Patrick Witt.
The high-stakes meeting, which took place during the ETHDenver conference, involved key industry players including Coinbase, Ripple, and venture capital firm Andreessen Horowitz, represented through trade groups like the Blockchain Association and the Crypto Council for Innovation. The banking sector was represented by the American Bankers Association, the Bank Policy Institute, and the Independent Community Bankers of America.
The White House presented draft legislative language for the CLARITY Act, requiring participants to hand over their phones and walking through the text line by line. The core of the proposed compromise involves a significant tradeoff: taking yield on idle stablecoin balances completely off the table, while allowing for narrowly scoped, activity-based rewards for stablecoins used in network participation or transactions.
To enforce the proposed ban on idle yields, the draft includes anti-evasion language that would grant enforcement authority to the Securities and Exchange Commission (SEC), the U.S. Treasury, and the Commodity Futures Trading Commission (CFTC). Violations could result in severe civil penalties of up to $500,000 per violation, per day.
Banking representatives argued that broad, deposit-like rewards could pull significant capital from traditional institutions, increasing systemic risk. Crypto firms countered that overly restrictive rules would stifle innovation and cement the advantage of incumbent financial players. The White House's direct involvement aimed to bridge this divide.
Officials are now targeting March 1 to resolve the remaining disputes. Success would allow the Senate Banking Committee, chaired by Senator Tim Scott, to reschedule its postponed markup session originally set for January 15. Stakeholders are watching for a potential fourth meeting this week and whether the final draft language can unlock progress on the broader crypto market-structure legislative package.
