Stablecoin Reward Dispute Eases as Path Clears for Senate Market Debate

TLDR

• The White House moved closer to resolving the stablecoin rewards issue after hosting detailed negotiations with banks and digital asset firms.
• Draft legislative text guided the discussion and helped narrow differences between the groups involved in the talks.
• Officials focused on stopping interest-style rewards while allowing incentives tied to user activity.
• Regulators prepared strict oversight measures to prevent any attempts to bypass the proposed rules.
• The administration aimed to finalize the stablecoin dispute by March 1 to support progress in the Senate.

The administration accelerated talks on stablecoin incentives as policymakers moved closer to a compromise and industry groups adjusted their expectations. Officials now aim to resolve the issue before March as lawmakers wait for clarity. The discussions advanced after the White House presented a draft text that guided participants through proposed wording and encouraged faster alignment. The process continued as both sectors weighed the effects of potential restrictions on stablecoin rewards.

White House Pushes Toward Agreement on Stablecoin Rules

Administration officials pressed banking and digital asset groups to narrow differences in stablecoin reward rules, and they used direct negotiations to reduce ongoing conflict. Patrick Witt said progress improved after a closed session that brought the groups into structured talks, and he stated that teams reduced the gap after reviewing draft legislative language. He explained that the effort aimed to settle the rewards question quickly because lawmakers required clarity before advancing market structure discussions.

Banks argued that unrestricted stablecoin rewards could draw deposits away from traditional accounts, and they warned that liquidity pressure could rise under broad incentive programs. Crypto firms countered that banning rewards tied to user activity could restrict development and preserve banking advantages, and they urged policymakers to allow limited incentive models. Sources said paying yield for simple holding no longer appeared possible, and they added that officials now focused on narrow rewards tied to transactions or network participation.

Draft language empowered regulators to review evasive programs and enforce strong penalties, and it aimed to stop interest-style products without blocking all incentives. Officials guided participants line by line through the text, and observers said this approach marked a more hands-on strategy than earlier industry-led meetings. Witt confirmed that the team targeted March 1 for resolution and indicated that progress on this issue could unlock the broader package.

SEC Quietly Adjusts Capital Treatment for Stablecoin Holdings

The Securities and Exchange Commission changed internal guidance so broker-dealers could count most high-quality stablecoin assets toward capital calculations, and the shift reduced previous balance-sheet limits. The new approach allowed firms to apply a 2% discount on these holdings, and it created more flexibility for firms using stablecoins in trading or custody operations. The guidance, however, came from staff channels and not from formal rulemaking, and regulators acknowledged that future revisions remained possible.

Institutions reviewed the update as they considered expanding stablecoin use in tokenization systems, and they evaluated how the new rule might influence operations. The adjustment followed ongoing federal work on market structure, and it aligned with increased discussions in Washington about stablecoin oversight. Regulators emphasized the technical nature of the change, and they maintained that it did not alter existing enforcement approaches.

Momentum Builds as Lawmakers Await Final Language

Officials said that a stablecoin compromise could accelerate the broader market structure package, and the Senate Banking Committee monitored progress closely. Lawmakers indicated that they would resume markup planning once the rewards issue reached closure, and they stressed that clear text remained necessary. The administration described the dispute as one of the final unresolved topics, and teams continued reviewing feedback as they prepared updated drafts.

Negotiators worked to settle the remaining language before the stated target, and they coordinated across agencies to finalize definitions. Participants said the next revisions would reflect input from banks and digital asset firms, and they expected rapid movement once consensus formed.

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