Crypto bill negotiations at White House show progress, agreement still elusive
White House hosts second round of discussions between cryptocurrency industry and banking sector representatives regarding crypto market structure legislation, with stablecoin provisions remaining a sticking point.
Discussions facilitated by the White House bringing together representatives from the cryptocurrency sector and banking industry to find common ground on stablecoin provisions within the market structure legislation have been characterized as "productive," though no final agreement has been reached.
"Productive session at the White House today — compromise is in the air," Ripple legal chief Stuart Alderoty, one of the meeting's attendees, posted to X on Tuesday.
"Clear, bipartisan momentum remains behind sensible crypto market structure legislation. We should move now — while the window is still open," he added.
Lawmakers in Congress are working toward passing legislation that would establish how regulatory authorities in the United States will oversee the cryptocurrency industry. The House of Representatives successfully passed comparable legislation, known as the CLARITY Act, in July, though progress has ground to a halt as the Senate Banking Committee has been unable to secure sufficient bipartisan backing to push it forward.
The drive to move the bill forward lost steam when Coinbase, a prominent cryptocurrency lobbying force, withdrew its backing for the legislation last month due to provisions that would ban all yield payments connected to stablecoins.
Representatives from the banking sector have contended that yield payments made to stablecoin holders through third-party platforms like exchanges present a threat to bank deposits and have the potential to destabilize the banking system.
Banking sector, crypto industry indicate additional talks necessary
Tuesday's meeting marked the second gathering in a two-week period that brought banking and cryptocurrency industry stakeholders to the White House; the initial meeting on Feb. 2 was characterized by White House crypto adviser Patrick Witt as "constructive" and "fact-based."
Dan Spuller, the industry affairs lead at crypto advocacy group the Blockchain Association, posted to X that the latest meeting "was a smaller, more focused session" with "serious problem-solving."
"Stablecoin rewards were front and center," he added. "Banks did not come to negotiate from the bill text, instead arriving with broad prohibitive principles, which remains a key disagreement."
According to reports, a handout distributed during the meeting by banking groups outlined "yield and interest prohibition principles" that should be incorporated into the Senate's cryptocurrency legislation, reinforcing the group's stance to prohibit all yield payments on stablecoins.
In a joint statement, three prominent banking groups, the American Bankers Association, the Bank Policy Institute, and the Independent Community Bankers of America, indicated that "ongoing discussions" were necessary to advance the legislation.
They added that a "framework can and must embrace financial innovation without undermining safety and soundness, and without putting the bank deposits that fuel local lending and drive economic activity at risk."
Meanwhile, BitGo CEO Mike Belshe said that both crypto and banks "should stop re-litigating" the GENIUS Act, which banned stablecoin issuers from paying yield directly, to get the market structure bill across the line.
"That battle was fought. If you don't like GENIUS, amend it," he added. "Market structure has nothing to do with yield on stablecoins and must not be delayed further."