TLDR
- White House directed today’s stablecoin talks rather than banks or crypto groups.
- Banks and crypto reps met to discuss limits on stablecoin rewards offerings.
- Draft text included narrow restrictions on rewards and anti-evasion enforcement.
- Talks may continue with a possible end-of-month deadline for agreements.
The White House took the lead in stablecoin discussions on Thursday, hosting a smaller meeting than last week. Representatives from major crypto firms including Coinbase, Ripple, and a16z attended. Trade groups such as the Blockchain Association and the Crypto Council also participated.
No individual banks were present. Bank interests were represented through trade associations including the American Bankers Association, Bank Policy Institute, and the Independent Community Bankers of America. Officials described the discussion as “productive” and “constructive,” reflecting agreement on the meeting process rather than specific outcomes.
Focus on Draft Text and Rewards Rules
Patrick Witt, Executive Director of the White House Crypto Council, presented draft language that became the central point of discussion. The text addressed concerns raised by banks in last week’s “Yield and Interest Prohibitions Principles” document. It emphasized that any future restrictions on rewards would be narrowly applied.
A key point in the draft is that earning yield on idle balances is not permitted. The discussion instead focused on whether crypto firms could offer rewards tied to specific activities. One attendee noted that “banks seem more concerned about competitive pressures than the original deposit flight risks.”
Bank Concerns and Deposit Studies
Bank representatives aim to include a study on deposit outflows in the draft. The study would examine the growth of payment stablecoins and potential effects on traditional bank deposits. According to one source, the study is being proposed even though initial fears of deposit flight appear less pressing.
Banks also expressed support for language allowing regulators such as the SEC, Treasury, and CFTC to enforce bans on paying idle balance yields. Civil penalties could reach $500,000 per violation, per day, under the draft proposal.
Next Steps and Timeline
Trade groups representing banks will brief their members on Thursday’s discussions. They will determine whether a compromise could allow crypto firms to offer activity-based rewards while maintaining regulatory oversight.
A source indicated that talks could continue over the coming days, with an end-of-month target for possible agreements. Both crypto and bank representatives appear willing to continue discussions under the White House’s guidance, keeping the focus on rules for stablecoin rewards.
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