White House Seeks Stablecoin Settlement Talks Amid Regulatory Standoff
The Biden administration is pushing for negotiations to resolve the escalating conflict over stablecoin yields—a move that could finally bring regulatory clarity to one of crypto's most contentious battlegrounds.
Regulatory Gridlock Meets Political Pressure
Washington's sudden willingness to talk marks a significant shift from months of regulatory posturing. Treasury officials have quietly reached out to major stablecoin issuers and congressional leaders, proposing closed-door sessions to hammer out compromise language on reward mechanisms that currently exist in a legal gray zone.
The Yield Conundrum
At stake: whether dollar-pegged tokens can offer interest-like returns without triggering securities regulations. The SEC maintains most yield-bearing stablecoins qualify as unregistered securities, while issuers argue they're simply distributing protocol revenue—a distinction that could determine whether these products survive in the U.S. market.
Banking Industry Pushback
Traditional financial institutions haven't been silent observers. Lobbyists have flooded Capitol Hill with warnings about "shadow banking" systems, arguing that stablecoin yields undercut FDIC-insured products while avoiding equivalent oversight. Because nothing protects innovation like established players crying unfair competition.
What's Actually on the Table?
Insiders suggest the administration might accept yield mechanisms if they're capped at Treasury bill rates and accompanied by strict reserve auditing—a potential win for issuers who've watched European competitors operate with clearer guidelines. The compromise would likely require congressional action, meaning this could either be the breakthrough crypto's been waiting for or another political football kicked into the 2028 election cycle.
Ultimately, these talks reveal what really moves Washington: not consumer protection concerns, but the realization that $160 billion in stablecoin value might flee U.S. jurisdiction entirely. Sometimes it takes the threat of capital flight to make regulators act like adults in the room.
The White House wants to hold talks to settle disagreements over stablecoin rewards
The White House wants to hold another private meeting with banks and crypto companies. At the center of the dispute is whether stablecoin companies or platforms should offer rewards, interest, or other incentives to holders of their tokens.
Banks say the rewards will make the banking system fragile, as more people MOVE their deposits out of traditional banks, creating financial risks for many. But crypto companies argue that the banks will have an unfair advantage without the rewards, and that people will turn to other, less regulated options that carry more risk if stablecoins cannot benefit them.
The White House held meetings to find common ground between the two sides, including the latest one on February 3, 2026. Bank and major crypto leaders met to discuss the future of crypto in the economy, but the meeting bore no fruit because the two sides couldn’t agree on clear rules for stablecoin rewards.
The White House is now trying to bring both sides back to the table for another meeting and has even proposed changes to the language of the new rules for lawmakers to use. Instead of a simple discussion, the talks will act like a careful drafting process.
Until banks and crypto organizations are on the same page regarding yields and interest on these assets, the government cannot finalize the overall crypto regulatory guidelines.
Banks say they could lose deposits, while crypto companies say rewards are fair
Banks have raised alarms about the money they could lose if stablecoins pay rewards or interest, so to them, this is a matter of protecting their deposits and keeping the financial system steady.
Standard Chartered warned that U.S banks could lose as much as $500 billion in deposits by 2028 if consumers move their money into stablecoins that offer higher returns.
Crypto companies snapped back, saying users are already actively seeking ways to earn higher rewards and interest on their money, and they won’t hesitate to explore unregulated channels. The companies say consumer risks will be higher if stablecoin rewards are banned.
The discussions involved banking trade associations, crypto advocacy organizations such as the Blockchain Association, and major U.S.-facing exchanges, including Coinbase. Their involvement shows just how complex and detailed the conversations are and how invested leaders are in finding a solution that works for both parties.
The meetings may have helped both banks and stablecoin companies understand each other’s concerns, but the rewards issue is still delaying progress in the expected crypto regulations. Both parties have exchanged ideas in every meeting, but have yet to reach an agreement that benefits everyone.
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