Crypto Firms Propose Community-Bank Stablecoin Fixes as Senate Talks Stall

Debate over yield-bearing stablecoins has frozen progress on US federal crypto legislation in the Senate. After the House passed its bill, negotiations stalled as traditional banks warned that stablecoins offering interest-like rewards could drain deposits from savings accounts. Crypto firms, according to Bloomberg, have proposed compromises to restart talks: expand the role of community banks in the stablecoin ecosystem, require issuers to hold reserves with community banks, or partner with them to issue stablecoins. A White House meeting on Feb. 2 between crypto and banking representatives produced no definitive outcome. Senate Banking Committee Chair Tim Scott indicated yield on crypto holdings might be permissible if issuers stop marketing themselves as banks and reassured there’s no systemic risk of deposit flight; he said further talks with consumer banks are planned. UK regulators are also reviewing stablecoin management in a House of Lords inquiry. Primary keywords: stablecoin regulation, community banks, Senate crypto bill. Secondary/semantic keywords: yield-bearing stablecoins, reserves, regulatory compromise, Tim Scott, White House meeting. Traders should watch legislative signals, bank lobbying, and any policy language on yields and reserve custody—these factors will influence stablecoin peg trust, on-chain liquidity and funding rates.