The White House is pushing for a compromise on stablecoin rewards in the latest meeting with crypto and banking industry representatives, aiming to break the deadlock on a critical piece of legislation that could shape the future of the crypto market.
The third meeting, held on Thursday, focused on the contentious issue of how stablecoin rewards should be structured, a key provision in the Senate’s crypto market structure bill. While no agreement was reached, the meeting marked a step forward, with progress noted by executives from major crypto firms like Coinbase and Ripple.
Progress and Pushback
Stablecoin rewards have been a sticking point in the negotiations, with banks concerned about the competitive pressures they might face from crypto firms. The White House’s crypto adviser, Patrick Witt, proposed a trade-off that would allow third parties, such as exchanges, to offer rewards tied to transactions and activity, but not on idle balances.
“We rolled up our sleeves and went through specific language today,” Ripple’s chief legal officer, Stuart Alderoty, posted on X. Coinbase’s legal head, Paul Grewal, echoed the sentiment, calling the meeting “constructive and the tone cooperative.”
The Blockchain Association CEO, Summer Mersinger, described the meeting as a “step forward” in resolving issues related to stablecoin rewards and advancing the crypto market structure legislation.
The Stalled Bill and Bipartisan Efforts
The Senate is looking to pass a bill that defines how U.S. market regulators will oversee the crypto industry. The House passed a similar version, the CLARITY Act, in July, but the effort has stalled in the Senate due to a lack of bipartisan support.
Banking groups, including the Bank Policy Institute, American Bankers Association, and Independent Community Bankers of America, have argued that stablecoin rewards could undermine the traditional banking system and lead to significant deposit outflows. The U.S. Treasury estimated in April that mass stablecoin adoption could trigger $6.6 trillion in deposit outflows from the banking system.
However, some banking representatives at the meeting noted that their concerns stem more from competitive pressures than from the risk of deposit flight. This nuance could be crucial in finding a middle ground that satisfies both the crypto and banking industries.
Looking Ahead
The banks are set to meet in the coming days to decide whether to agree to the proposed trade-off. The outcome of these discussions could have significant implications for the crypto market structure bill and the broader regulatory landscape for stablecoins in the United States.
As the negotiations continue, the White House and industry representatives are optimistic that a compromise can be reached, paving the way for a more defined and stable regulatory environment for the crypto sector.
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