Washington’s crypto rulebook may soon get past one of its most stubborn roadblocks: whether stablecoin issuers and platforms can legally attach rewards to their tokens.
- The White House is close to a compromise on stablecoin rewards, a key hurdle in crypto market structure talks.
- Yield on idle stablecoins is likely off the table, with limited activity-based rewards still under discussion.
- Officials aim to settle the issue by March 1 to move broader legislation forward.
- The SEC has eased capital treatment for stablecoins, boosting their role in traditional finance.
Behind the scenes, administration officials have been working to broker a truce between banks and digital asset firms, two camps that have clashed for months over how far stablecoin incentives should go. According to White House Crypto Council Executive Director Patrick Witt, the distance between the sides has narrowed significantly after a recent closed-door session that brought industry and banking groups to the same table.
Yield on Idle Stablecoins Effectively Off the Table
For banks, the concern is straightforward. If stablecoins begin offering returns comparable to deposit accounts, customers could move funds out of traditional banks, draining liquidity and increasing systemic pressure. Crypto firms, on the other hand, argue that banning rewards outright would freeze product innovation and tilt the market in favor of legacy financial institutions.
The latest draft discussions suggest a middle ground is emerging.
Sources familiar with the talks say that paying yield simply for holding stablecoins – once a major industry objective – is no longer a realistic outcome. Instead, policymakers are examining whether rewards could be tied narrowly to specific user actions, such as transaction activity or network participation, rather than passive balances.
To prevent backdoor yield structures, proposed language would give federal regulators authority to police evasive arrangements, with steep financial penalties for violations. The goal is to eliminate interest-like products without blocking all forms of incentives.
White House Steps Into the Driver’s Seat
Unlike earlier industry-led meetings, the administration reportedly arrived with draft legislative text in hand, guiding participants line by line through potential compromise wording. The effort signals a more hands-on strategy from the White House, which appears determined to break the stalemate quickly.
Witt indicated that officials are aiming to resolve the stablecoin rewards issue by March 1. If an agreement is reached, it could unlock progress on the broader crypto market structure package that has been delayed in the Senate Banking Committee.
Lawmakers are waiting for clarity on this specific dispute before moving forward with markup discussions. According to administration officials, once the rewards question is settled, the rest of the framework could advance at a much faster pace.
SEC Quietly Shifts Stablecoin Treatment
At the same time, regulators have made a technical but meaningful adjustment that strengthens stablecoins’ standing inside the traditional financial system.
The Securities and Exchange Commission updated internal guidance allowing broker-dealers to count most high-quality stablecoin holdings toward their regulatory capital requirements, subject to a modest 2% discount. Previously, these assets were effectively excluded from capital calculations.
The change reduces the balance-sheet penalty for holding stablecoins and may encourage more institutions to integrate them into trading, custody and tokenized securities operations. However, because the clarification was issued through staff guidance rather than formal rulemaking, it could still be revised in the future.
Domino Effect for Market Structure?
Taken together, the White House’s narrowing of the rewards debate and the SEC’s recalibration of capital treatment point to a broader shift in tone. The conversation is no longer about whether stablecoins belong in U.S. finance, but about defining the guardrails around their use.
If negotiators manage to finalize a compromise in the coming days, it could remove one of the last major obstacles holding up comprehensive crypto market structure legislation – and potentially set off the “domino effect” officials believe would accelerate the entire process.
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Alex is an experienced financial journalist and cryptocurrency enthusiast. With over 8 years of experience covering the crypto, blockchain, and fintech industries, he is well-versed in the complex and ever-evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His approach allows him to break down complex ideas into accessible and in-depth content. Follow his publications to stay up to date with the most important trends and topics.
Source: https://coindoo.com/stablecoin-dispute-nears-resolution-clearing-path-for-senate-action/