The White House has reportedly refocused talks between crypto and bank lobbyists on limiting how stablecoin rewards should be paid in the third meeting between the two groups over a crypto market structure bill.
Crypto and banking industry representatives met at the White House on Thursday for the third time in 16 days to discuss stablecoin provisions that have stalled the crypto bill, which the Senate is looking to pass.
No agreement was reached on Thursday, but executives at Coinbase and Ripple said progress was made, as one of the White House’s crypto advisers urged a trade-off that would let third parties, such as exchanges, offer stablecoin rewards only on transaction activity, not on balances.
“We rolled up our sleeves and went through specific language today,” Ripple’s chief legal officer, Stuart Alderoty, posted to X on Thursday. Coinbase’s legal head, Paul Grewal, said the meeting was “constructive and the tone cooperative.”
Blockchain Association CEO Summer Mersinger said the meeting was a “step forward” toward resolving issues related to stablecoin rewards and advancing legislation on the crypto market structure.
Source: Blockchain Association
It’s the third meeting between the three parties, who first met on Feb. 2 and again eight days later on Feb. 10, as the Senate is looking to pass a bill to define how US market regulators will police crypto.
The House passed a similar version of the bill, called the CLARITY Act, in July, but the effort has stalled as the Senate Banking Committee has not yet secured enough bipartisan support to move it forward.
Semafor reporter Eleanor Mueller and journalist Eleanor Terrett both reported that White House crypto adviser Patrick Witt drove the discussion at the latest meeting.
Witt pushed for a previously pitched proposal that would allow third parties to offer stablecoin rewards to customers tied to transactions and activity, rather than to balances, a sticking point for banks.
“Earning yield on idle balances, a key crypto industry goal, is effectively off the table,” Terrett said, citing those who attended the meeting. “The debate has narrowed to whether firms can offer rewards linked to certain activities.”
Semafor’s Mueller reported that the banks will start meeting tomorrow to decide whether to agree to the trade-off, and added that discussions would continue in the coming days.
Related: Banks can’t seem to service crypto, even as it goes mainstream
The Bank Policy Institute, the American Bankers Association, and the Independent Community Bankers of America represented the banking industry, none of which has publicly commented on the latest White House meeting.
Banks fear competitive pressures, not deposit flight risk
Banking groups have argued that stablecoin rewards will compete with and undermine the banking system, leading to bank deposits shifting to stablecoins.
The US Treasury estimated in April that widespread adoption of stablecoins could trigger $6.6 trillion in deposit outflows from the banking system.
However, according to Terrett, one banking member at the meeting said their concerns stem more from competitive pressures than from deposit flight.
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