White House Crypto Talks Hit Impasse Over Stablecoin Yields, Banking Industry Urges Caution
A White House-led effort to broker a deal on cryptocurrency regulation stalled Monday as traditional banks and digital asset firms remained at odds over whether stablecoins should be allowed to offer yields or rewards, multiple sources familiar with the discussions told our newsroom.
The meeting, convened by senior advisers to President Donald Trump and held in the Diplomatic Reception Room, brought together policy experts from major Wall Street trade groups and leading crypto companies including Coinbase, Circle, and Ripple. While described as constructive, the more than two-hour session failed to produce consensus on one of the most divisive issues: the potential for yield-bearing stablecoins to compete with traditional bank deposits.
"The banks are playing for time," said one crypto industry participant, who spoke on condition of anonymity. "They outnumbered us in the room, but their position seemed designed to slow-walk any real progress."
Administration officials, led by crypto adviser Patrick Witt, pressed both sides to return with specific compromise language before the end of February, according to three people briefed on the talks. The urgency stems from a narrowing legislative window; a comprehensive crypto market structure bill has passed the House and cleared one Senate committee, but faces a complex path through the Senate Banking Committee and a full floor vote.
Banking representatives, including members from the American Bankers Association and the Financial Services Forum, emphasized systemic risks in a joint statement. "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," the groups said.
From the crypto side, the Digital Chamber's Chief Policy Officer Cody Carbone struck a more optimistic tone. "This was exactly the kind of progress needed to find a resolution to one of the biggest issues blocking next steps," Carbone said, calling the meeting a necessary step to prevent the legislation from stalling entirely in an election year.
The debate over yields is not the only hurdle. Democratic lawmakers are pushing for anti-corruption provisions, including measures that would restrict senior officials from profiting from crypto assets—a potential complication following recent reports about foreign investment in Trump-linked crypto ventures. Furthermore, a partial government shutdown has diverted congressional attention and resources, potentially delaying staff-level negotiations.
As the policy wrangling continues, stakeholders are preparing for a follow-up meeting with a smaller group to hammer out technical details. The outcome could determine whether the U.S. establishes a clear regulatory framework for digital assets this year, or kicks the issue to a new Congress.
Reader Reactions:
Marcus Chen, Fintech Analyst at Hartford Capital: "The banks' concern is legitimate but overstated. Regulated yield options could coexist with traditional deposits, much like money market funds do. This is about protecting turf, not just protecting consumers."
Eliza Rodriguez, Small Business Owner: "As someone who uses crypto for cross-border payments, this endless delay is frustrating. We need clarity now. The banks had decades to innovate and didn't. They shouldn't get to veto the future."
David P. Thornton, Former Bank Regulator: "The systemic risk arguments are serious. We learned from 2008 what happens when novel financial products outpace their regulatory guardrails. Moving deliberately is a feature, not a bug, of the process."
Anya Petrova, Crypto Developer: "This is a farce. The banks are leveraging their political influence to stifle competition under the guise of 'stability.' Meanwhile, innovation and users are moving offshore. The White House needs to show real leadership or admit this framework is dead."