New Draft Text Narrows Stablecoin Yield Debate in Washington

TLDR:

• White House draft language shifted the stablecoin meeting from broad bans toward narrow rules on rewards.
• Banks now cite competition risks over deposit flight as their main concern in stablecoin policy talks.
• Regulators would gain authority to fine firms $500,000 daily for illegal yield on idle balances.
• Trade groups aim to reach compromise on stablecoin rewards before an end-of-month deadline.

Bitcoin and stablecoin policy talks in Washington entered a new phase as the White House assumed direct control of discussions. The latest stablecoin meeting brought together fewer participants but sharper policy direction. 

Officials circulated draft language that reframed disputes over rewards and yield. The talks now center on narrow limits instead of broad industry bans.

Stablecoin meeting steered by White House draft language

The stablecoin meeting included representatives from Coinbase, Ripple, and Andreessen Horowitz. Trade groups such as Blockchain Association and Crypto Council for Innovation also attended.

No individual banks sent executives to the room. Instead, banking voices came through American Bankers Association, Bank Policy Institute, and Independent Community Bankers of America.

According to reporting by Eleanor Terrett, the White House set the agenda rather than letting industry groups lead. White House Crypto Council Executive Director Patrick J. Witt presented draft text that guided the entire discussion.

The language acknowledged bank objections raised in a prior document on yield and interest limits. It also clarified that any future restrictions on rewards would remain narrowly defined.

Stablecoin rewards debate narrows to specific activities

Participants said earning yield on idle stablecoin balances now appears excluded from negotiations. The remaining debate focuses on whether rewards tied to certain activities can continue.

A crypto-side attendee said banks now frame their concerns around competition rather than deposit flight. Earlier discussions had emphasized risks to bank deposits from payment stablecoins.

Bank representatives continue to push for a formal study on deposit outflows. The proposal would examine how stablecoin payment growth could affect traditional banking balances.

Draft language also introduced anti-evasion enforcement measures. These provisions would grant the Securities and Exchange Commission, the United States Department of the Treasury, and the Commodity Futures Trading Commission authority to police violations.

Civil monetary penalties would reach $500,000 per violation per day. Officials framed this as a deterrent against indirect yield payments.

Bank trade groups will now brief their members and test whether compromise remains possible. The focus rests on limited rewards rather than full prohibition.

Sources close to the talks said the timeline has tightened. Negotiators now view an end-of-month target as achievable as discussions continue over the coming days.

The post New Draft Text Narrows Stablecoin Yield Debate in Washington appeared first on Blockonomi.