Crypto vs Banks: What Really Happened at the White House Stablecoin Yield Talks

• Banks refuse yield on stablecoin ownership but hint at narrow exemptions for transaction-based rewards.
• White House sets March 1st deadline as crypto firms and banks debate permissible activity definitions.
• Coinbase holds firm while other crypto players lean toward banking demands in stablecoin yield dispute.

The White House hosted its second meeting on stablecoin yields this week. Banks and crypto representatives gathered for what many called a productive session. 

However, no final agreement emerged from the talks. Both sides shared new details about their positions and potential compromises.

Banks Draw Hard Lines on Stablecoin Rewards

Banking institutions came prepared with written “prohibition principles” at the meeting. 

The document outlined strict red lines on stablecoin yield offerings. According to Fox Business reporter Eleanor Terrett, banks refuse to allow yield for simply holding stablecoins.

The banking position extends beyond basic ownership restrictions. Their handout stated that yield on “use” or “ownership” of tokens remains off-limits. Any exemptions from these prohibitions “must be extremely limited in scope.”

One crypto source noted a potential banking concession. The phrase “any proposed exemption” in paragraph two signals willingness to discuss some exceptions. Previously, banks refused to negotiate exemptions for transaction-based rewards at all.

Crypto Firms Push for Broader Activity Rules

The meeting focused heavily on “permissible activities” for stablecoin accounts. These rules would define which account actions could allow crypto firms to offer rewards. 

Crypto representatives want broad definitions for these activities. Banks prefer narrow, restrictive language.

Attendees from the crypto side included Paul Grewal from Coinbase and Miles Jennings from a16z. Stuart Alderoty from Ripple and Josh Rosner from Paxos also participated. Representatives from the Blockchain Association and Crypto Council joined them.

Major banks sent their own delegations to the talks. Goldman Sachs, JPMorgan, Bank of America, and Wells Fargo attended. Citibank, PNC Bank, and US Bank also participated. Trade groups like the Bank Policy Institute and American Bankers Association joined them.

White House Sets March 1st Deadline

This second meeting was notably smaller than the first gathering. Patrick Witt, Executive Director of the President’s Crypto Council, led the session. Senate Banking Committee staff members also attended the talks.

Ripple’s Stuart Alderoty shared his perspective on social media. “Compromise is in the air,” he wrote after the meeting. He emphasized bipartisan momentum behind crypto legislation and urged quick action.

Reporter Sander Lutz suggested this could be the last White House meeting. The responsibility may shift to Senate Banking and trade groups themselves. 

Some crypto players are reportedly leaning toward banking demands. Coinbase, however, continues to “hold out” on key issues.

What Happens Next for Stablecoin Legislation

The White House wants both sides to reach an agreement by March 1st.

Further discussions between the parties will happen in the coming days. Whether another large-scale meeting occurs before month’s end remains uncertain.

The banking handout appears more restrictive than recent market structure drafts. Previous legislative language allowed yield on certain stablecoin activities. Coinbase withdrew support over that very language.

Sources from both camps described the meeting as productive despite the lack of resolution. Deal specifics received more detailed discussion than in previous sessions.

Both sides are actively exploring solutions to their disagreements.

The stablecoin yield debate highlights broader tensions in crypto regulation. Banks worry about competitive disadvantages if crypto firms can offer rewards. Crypto companies argue that innovation requires flexibility in product structuring.

Clear rules on stablecoin yields could unlock market growth. Stablecoins represent billions in market value and facilitate massive transaction volumes. How regulators handle yield questions will shape the industry’s future development.

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