A growing standoff in Washington over stablecoin rewards has intensified after a leading crypto trade group issued its own set of principles to counter demands from major Wall Street banks. The dispute centers on whether stablecoin issuers should be prohibited from offering any form of yield or rewards, a disagreement that has stalled progress on a broader U.S. Senate digital asset market structure bill.
The conflict emerged after banking representatives circulated a position paper at the White House calling for a total ban on stablecoin yield. Banks argue that allowing interest like rewards on dollar backed tokens could threaten the traditional deposit model that underpins the U.S. banking system. In their view, stablecoin products that resemble savings accounts risk diverting funds away from regulated depository institutions.
In response, The Digital Chamber, a prominent crypto industry advocacy group, drafted its own principles document defending limited forms of stablecoin rewards. The group contends that while pure interest payments on idle stablecoin balances may warrant restrictions, incentives tied to transactional activity, liquidity provision, and ecosystem participation should remain permissible. According to the organization, such rewards are essential for decentralized finance applications and broader blockchain network growth.
The debate has complicated negotiations surrounding the Senate’s Digital Asset Market Clarity Act. Although stablecoin regulation was more directly addressed in the previously enacted GENIUS Act, disagreements over yield provisions have spilled into the new legislation. Lawmakers had been working to reconcile differences between industry participants and banking stakeholders, but talks reportedly reached an impasse during recent White House discussions.
Digital Chamber leadership indicated that the group is willing to concede ground on products that closely resemble bank savings accounts. However, it argues that a blanket prohibition would undermine innovation and conflict with the framework established under existing law. The organization has also signaled openness to a two year study examining the impact of stablecoins on bank deposits, provided it does not automatically trigger additional rulemaking.
White House officials have encouraged both sides to seek compromise, with another meeting reportedly under consideration. Policymakers face the challenge of balancing financial stability concerns with the rapid evolution of digital payment infrastructure. Stablecoins have become integral to crypto trading, cross border payments, and decentralized finance protocols, and any restrictions on yield mechanisms could influence how capital flows within the ecosystem.
The broader legislative path remains uncertain. While one Senate committee has advanced its version of the bill, final passage would require bipartisan support. With stablecoin rules emerging as a flashpoint in an otherwise market structure focused debate, the outcome may shape how digital dollar tokens coexist with the traditional banking sector in the years ahead.
