White House Stablecoin Bill Stalls as Banks Push Ban on Crypto Rewards

• Banks want stablecoin rewards banned, fearing people will move money out of bank deposits.
• Crypto firms want rewards allowed, saying they are essential for growth and innovation.

The White House has revealed that major disagreements remain between the crypto firm and the banking sector on how the stablecoins should be regulated. Crypto firms have prepared to discuss a compromise solution, but the banking sector continues to prohibit any form of yield, incentives, or benefits tied to holdings of stablecoins. 

Why Stablecoin Rewards play a key role in the debate

Stablecoin rewards work in a way similar to the traditional bank interest system. Crypto firms say that these programs help the users to attract customers and are the core part of their business model. Banks argue that these stablecoin rewards are in direct competition with the savings deposit, which will be a risk to the traditional financial system. 

Representatives from the large crypto firms, such as Coinbase and Ripple, met the banking groups and government officials at the White House. The White House encourages compromise from both sides. But the banking groups pushed against a full ban on the rewards linked to holding or using stablecoins. They released a short statement that they need the crypto companies to stop giving users interest, incentives, and bonuses just for keeping the stablecoins. 

Crypto representatives say they were still hopeful and the discussions would continue. The disagreements are blocking the movement on the Senate’s major crypto legislation. Before the bill can move forward, it must pass the Senate Banking Committee, and the lawmakers need enough support from both parties. 

Other than the Stablecoin issue

The yield issue is not the only challenge. Some democratic lawmakers want restrictions preventing senior government officials from benefiting from crypto businesses and strong anti-money laundering protection. At the same time, the White House has indicated that it would oppose measures aimed directly at the president. 

Time is the major problem the Congress faces, even if the negotiators reach agreements. Lawmakers must also deal with the budget fights and other national priorities. Right now, the stablecoin rewards issue remains unsolved. 

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