Crypto vs. Banks: Who Blinks First?

 Crypto firms and banks remain deadlocked on stablecoin yield rules ahead of the White House’s February deadline, threatening the Clarity Act’s progress.

Two meetings. No deal. The clock is running out. Three weeks into February, crypto firms and traditional banks still can’t agree on a single issue: whether stablecoins should be allowed to pay yield. That disagreement now threatens to stall the Clarity Act before it even reaches a full Senate vote.

As Eleanor Terrett flagged on X, the stablecoin yield standoff is back at the top of the Washington agenda, and both sides are still miles apart heading into what could be a third White House sit-down this week.

Banks Want Yield Dead. Crypto Says Absolutely Not.

Last Tuesday’s White House meeting between senior bank policy staff and crypto firm representatives ended without any agreement. Banks circulated a one-page document called “Yield and Interest Prohibition Principles.” The message was blunt. Any yield or rewards tied to stablecoins should be banned outright.

The Digital Chamber fired back fast. The industry trade group representing over 130 crypto firms, plus some traditional banks with digital asset exposure, dropped its own counter-principles on Friday. Their proposal lets payment stablecoins generate yield inside DeFi environments.

“These principles push to preserve stablecoins as payment instruments, protect DeFi liquidity and dollar dominance, and establish a data-driven framework for assessing deposit impact,” the Digital Chamber said, per Crypto In America.

Banks haven’t formally responded to the Chamber’s document. A Senate Banking Committee source told Crypto In America the proposal was “constructive” but warned that parts of it may be too broad to get bank buy-in.

Must Read: BlackRock and Robinhood Lead Wall Street’s DeFi Breakthrough — big finance is already moving into DeFi while regulators debate the rules.

A Third Meeting – But No Date Yet

Patrick Witt, executive director of the White House Crypto Council, told Yahoo Finance on Friday that another meeting could happen as early as this week. He gave no specific day. Both the House and Senate are in recess through the Presidents’ Day break, so legislative pressure is on pause for now.

The yield question isn’t just a policy spat. It’s the key blocker stopping the Senate Banking Committee from rescheduling a vote to push the Clarity Act to the full Senate. Miss the end-of-month deadline? The bill risks getting buried deeper in the congressional backlog.

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Meanwhile, the CFTC is quietly putting its house in order. Chairman Mike Selig appointed a 35-member Innovation Advisory Committee, pulling in CEOs from Coinbase, Ripple, Uniswap, Kraken, Bullish, and Grayscale. Wall Street wasn’t left out; Nasdaq, CME, CBOE, and ICE all got seats. Prediction market platforms Kalshi and Polymarket made the list, too. The IAC is built on an initial batch of 10 names assembled under former Acting Chair Caroline Pham.

“By bringing together participants from every corner of the marketplace, the IAC will be a major asset for the Commission as we work to modernize our rules,” Selig said in an official statement.

Atkins Faces Senate Fire Over Enforcement Pullback

SEC Chair Paul Atkins sat before the Senate Banking Committee last week. His message was a direct break from Gary Gensler’s playbook: clear rules instead of enforcement-first regulation. Atkins said tokenized securities remain securities. He stressed investor rights to self-custody. Congress needs to pass legislation, or crypto innovators stay stuck in gray areas, he argued.

Democrats pushed back hard. They said enforcement has been scaled back and investor protections weakened on his watch. Atkins disagreed. The SEC is still watching fraud and market abuse, he said, including in crypto, but won’t push beyond its legal authority.

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Bo Hines, Tether US CEO and former White House Crypto Council executive director, weighed in on the debate, too. Speaking at the Digital Assets at Duke Conference, his first interview since launching USAT in January, Hines said he’s bullish on stablecoins expanding US dollar dominance globally. On the Clarity Act delays, he was direct. Most securities will eventually be tokenized, he told Crypto In America hosts Eleanor Terrett and Gerald.

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