White House Pushes Stablecoin Rewards Compromise in Third Crypto-Bank Meeting

TLDR

• The White House held a third meeting between crypto and bank lobbyists to discuss stablecoin rewards in a crypto market structure bill.
• White House crypto adviser Patrick Witt pushed a compromise: stablecoin rewards tied to transactions only, not idle balances.
• Coinbase and Ripple said progress was made, but no final agreement was reached.
• Banks will meet to decide whether to accept the trade-off, with discussions continuing in coming days.
• Several other issues remain unresolved, including Democratic demands on DeFi protections and government officials’ crypto involvement.

The White House hosted its third meeting in 16 days between crypto and banking lobbyists on Thursday, February 19, focused on resolving a stablecoin dispute blocking a major crypto bill.

The meeting was led by White House crypto adviser Patrick Witt, who is part of President Donald Trump’s crypto policy team.

The talks center on the Digital Asset Market Clarity Act, a bill the Senate is working to pass that would define how US regulators oversee crypto markets. The House passed a similar version, called the CLARITY Act, in July 2024.

The Senate Banking Committee has not yet secured enough bipartisan support to advance the bill. Stablecoin reward rules have been one of the main sticking points.

At the heart of the dispute is whether crypto platforms should be allowed to offer rewards to stablecoin holders. Banks argue this would compete directly with their deposit business.

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

However, a banking representative at Thursday’s meeting said the concern is more about competitive pressure than actual deposit flight risk.

What the White House Is Proposing

Witt pushed a compromise position: allow third parties, such as exchanges, to offer stablecoin rewards tied to transaction activity, but not on idle balances.

Earning yield on held stablecoin balances — a key goal for the crypto industry — appears to be off the table under this proposal.

The White House made clear that some form of rewards program would be included in the next draft of the bill, according to two people familiar with the negotiations.

Banking representatives at the meeting were actively working on the language, though a final draft still needs to be circulated and reviewed by the banks.

Where Talks Stand Now

Coinbase’s legal head Paul Grewal called the meeting “constructive” with a “cooperative” tone. Ripple’s chief legal officer Stuart Alderoty said participants worked through “specific language.”

Blockchain Association CEO Summer Mersinger called it a “step forward” toward resolving the rewards issue and keeping the market structure bill on track.

The banks involved — the Bank Policy Institute, the American Bankers Association, and the Independent Community Bankers of America — have not publicly commented.

Those groups are set to meet on Friday to decide whether to accept the White House’s proposed trade-off.

Several other issues remain unresolved. Democratic negotiators are pushing for a ban on senior government officials participating in the crypto industry, a full slate of CFTC and SEC commissioners, and stronger DeFi protections.

None of the Democrats’ major demands have been settled. The bill cannot pass the full Senate without meaningful Democratic support.

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