White House Convenes Crypto and Banking Leaders Amid Market Turmoil
WASHINGTON — The Biden administration has called a high-stakes meeting with top executives from major cryptocurrency firms and leading banks, scheduled for Thursday afternoon. The gathering comes in the wake of a severe market correction that saw Bitcoin and other major digital assets shed significant value over the weekend.
The closed-door session, confirmed by multiple sources, aims to address a contentious provision within the pending crypto market structure legislation. At the heart of the debate is the treatment of "rewards" or "incentives" that third parties, such as exchanges, can offer to holders of stablecoins—digital tokens pegged to assets like the U.S. dollar.
While the GENIUS Act, signed into law last year, explicitly prohibits stablecoin issuers from paying interest, it does not prevent other entities from offering benefits to attract holders. Traditional banks view this as a regulatory loophole that could trigger a massive shift of deposits out of the banking system. A recent analysis by Standard Chartered warned that banks could face up to $500 billion in deposit outflows by 2028 if the stablecoin market expands as projected.
"This isn't just about competition; it's about financial stability," said a banking industry representative familiar with the talks. "Allowing unchecked rewards on what are essentially digital bank accounts creates an unlevel playing field and systemic risks."
The crypto industry counters that the banking sector's push to restrict third-party rewards is an attempt to stifle innovation. "This is a classic case of legacy institutions trying to regulate their competitors out of existence," argued a spokesperson for the Blockchain Association, which represents firms like Coinbase and Kraken. The trade group confirmed its participation in the upcoming meeting.
The debate has grown so heated that it prompted Coinbase CEO Brian Armstrong to withdraw his initial support for the broader market structure bill. The House passed its version of the legislation last July, but the Senate's work continues, making this week's White House meeting a potential catalyst for compromise.
Reader Reactions:
Marcus Chen, Fintech Analyst: "This meeting is long overdue. The regulatory ambiguity around stablecoins is hindering both innovation and consumer protection. A clear framework is needed to allow responsible growth."
David Reeves, Former Bank Regulator: "The banks have a point about deposit flight, but the solution isn't to ban features. It's to ensure stablecoin issuers and intermediaries meet the same liquidity and disclosure standards as other financial institutions."
Sarah Johnson, Small Business Owner: "As someone who uses crypto for cross-border payments, this constant regulatory fighting is exhausting. Just figure it out! Stablecoins are a tool. Regulate the bad actors, not the technology."
Gerald Miller, Retired Banker: "This is madness. We're letting speculative digital tokens that just crashed 20% pretend to be bank accounts? The White House shouldn't be negotiating; it should be shutting this down until proper safeguards, including a ban on all rewards, are in place."
This story was originally published by TheStreet on Feb 2, 2026. Add TheStreet as a Preferred Source by clicking here.