White House stablecoin talks hit snag… banks draw a line on allowing rewards

Talks at the U.S. White House on a stablecoin framework between the crypto industry and the banking sector reportedly wrapped up without a clear agreement.

According to CoinDesk on the 10th (local time), the White House on the previous day convened representatives from the crypto industry and major banking trade groups to coordinate views on the Digital Asset Market Structure bill being discussed in the Senate, the Digital Asset Market Clarity Act (Clarity Act). The core issue at the meeting was whether to allow stablecoin rewards programs.

A source familiar with the discussions said, “The crypto industry attended the meeting prepared to discuss a legislative compromise on stablecoin rewards, but the banking sector did not come in with a willingness to compromise.” The banking sector is said to have maintained its long-standing stance that stablecoin rewards activity should be banned.

Attendees reportedly included representatives from Coinbase, Ripple, Andreessen Horowitz (a16z), the Crypto Council for Innovation (CCI) and the Blockchain Association. The White House tried to keep the discussion working-level by limiting the number of participants, but the assessment is that there was no progress on the stablecoin rewards issue.

Still, the crypto industry signaled its willingness to keep negotiating immediately after the meeting. Summer Mersinger, CEO of the Blockchain Association, said, “There was progress in that stakeholders are discussing matters constructively to resolve outstanding issues.”

Ji Kim, CEO of the Crypto Council for Innovation, also said after the meeting, “Important discussions are continuing,” adding, “We appreciate the banking sector’s continued engagement.”

Banking groups also reaffirmed their position in a joint statement. The Bank Policy Institute (BPI) and the American Bankers Association (ABA) said, “We embrace financial innovation, but it must not undermine safety and soundness or threaten bank deposits that support community lending and economic activity.” They did not, however, make any specific comments on the legislative process ahead or possible compromise proposals.

The bill has already cleared the Senate Committee on Agriculture, Nutrition, and Forestry, and a bill with the same name passed the House last year. Still, overcoming the Senate Banking Committee hurdle remains contingent on resolving the banking sector’s opposition.

In addition, Democratic negotiators are reportedly demanding, as prerequisites for the bill, provisions limiting senior officials’ involvement with digital assets, stronger safeguards against illicit-finance use, and completion of appointments at the Commodity Futures Trading Commission (CFTC).

Patrick Witt, a White House adviser on crypto policy, voiced optimism that the talks could make progress soon, but said, “The White House will not agree to legislation that includes provisions aimed at the President.”