White House floats limited stablecoin rewards in 3rd crypto, bank meeting

The White House has reportedly refocused talks between crypto and bank lobbyists on limiting how stablecoin rewards should be paid in the third meeting between the two groups over a crypto market structure bill.

Crypto and banking industry representatives met at the White House on Thursday for the third time in 16 days to discuss stablecoin provisions that have stalled the crypto bill which the Senate is looking to pass.

No agreement was reached on Thursday, but executives at Coinbase and Ripple said progress was made as one of the White House’s crypto advisers urged a trade-off to let third parties, such as exchanges, offer stablecoin rewards only on transaction activity, not balances.

“We rolled up our sleeves and went through specific language today,” Ripple’s chief legal officer, Stuart Alderoty, posted to X on Thursday. Coinbase’s legal head, Paul Grewal, said the meeting was “constructive and the tone cooperative.”

Blockchain Association CEO Summer Mersinger said the meeting was a “step forward” in resolving issues related to stablecoin rewards and ensuring that crypto market structure legislation is advanced.

Source: Blockchain Association

It's the third meeting between the three parties, who first met on Feb. 2 and again eight days later on Feb. 10, as the Senate is looking to pass a bill to define how US market regulators will police crypto.

The House passed a similar version of the bill, called the CLARITY Act, in July, but the effort has stalled as the Senate Banking Committee has not yet secured enough bipartisan support to move it forward.

Semafor reporter Eleanor Mueller and journalist Eleanor Terrett both reported that White House crypto adviser Patrick Witt drove the discussion at the latest meeting.

Witt pushed for a previously pitched proposal that would allow third parties to offer stablecoin rewards to customers tied to transactions and activity, and not balances, the latter of which has been a sticking point for banks.

“Earning yield on idle balances, a key crypto industry goal, is effectively off the table,” Terrett said, citing those who attended the meeting. “The debate has narrowed to whether firms can offer rewards linked to certain activities.”

Semafor’s Mueller reported that the banks will start meeting tomorrow to decide whether to agree to the trade-off, and added that discussions would continue in the coming days.

The Bank Policy Institute, American Bankers Association and Independent Community Bankers of America represented the banking industry, none of which have publicly commented on the latest White House meeting.

Banks fear competitive pressures, not deposit flight risk

Banking groups have argued that stablecoin rewards will compete with and undermine the banking system and lead to bank deposits shifting to stablecoins.

The US Treasury estimated in April that mass stablecoin adoption could trigger $6.6 trillion in deposit outflows from the banking system.

However, according to Terrett, one banking member at the meeting said their concerns stem more from competitive pressures than from deposit flight.