Tensions between major banks and crypto firms remain unresolved after another round of talks at the White House failed to produce an agreement ahead of the March 1 deadline. The core issue is whether crypto companies should be allowed to offer yield on dollar pegged stablecoins without pulling deposits away from traditional banks.
According to reports from participants, the meeting was described as constructive, but no final compromise was reached. Banking representatives presented a formal set of principles arguing that payment stablecoins, as defined under proposed legislation, should function strictly as payment tools rather than interest bearing products. They called for a broad prohibition on any financial or non financial incentives tied to holding or using such tokens.
The banking proposal included limited exemptions, penalties for violations, and strict restrictions on marketing stablecoins as deposit like or federally insured products. One shift in tone was the willingness to consider potential exemptions, marking a change from earlier resistance to any carve outs.
Crypto firms, however, are advocating for more flexible definitions that would allow platforms to provide certain user rewards. The disagreement highlights a broader legislative battle over digital asset regulation.
The meeting was led by the executive director of the President’s Crypto Council and included representatives from Coinbase, Ripple, a16z, Paxos, and major banking institutions such as JPMorgan, Goldman Sachs, Bank of America, Citi, Wells Fargo, PNC, and U.S. Bank, along with industry trade groups.
While some participants expressed cautious optimism, the issue remains unsettled, and further discussions are expected.
The debate comes as lawmakers work on broader crypto market legislation. Banks warn that yield offering stablecoins could shift substantial funds out of checking and savings accounts, reducing lending capacity. Some analysts estimate that stablecoins could draw hundreds of billions of dollars in deposits from banks in developed economies over the next several years.
