White House mediates second meeting to settle stablecoin yield rules between banks and crypto
The White House has convened a second, higher-level meeting between banks, crypto trade groups and senior administration staff to negotiate whether digital-asset firms can offer interest on dollar-pegged stablecoins — the principal sticking point delaying the CLARITY Act. The earlier closed-door session produced no agreement as banks warned yield-bearing stablecoins could trigger deposit outflows and weaken bank funding. The follow-up talks will be smaller, focus on practical terms and aim for a compromise by late February. Bloomberg reports crypto firms want community banks more involved — proposing custody of reserve funds, joint ventures to issue bank-backed digital currencies, and other arrangements intended to reduce systemic risk and keep federal legislation on track. The administration is pressing for faster regulatory clarity to preserve U.S. leadership as other jurisdictions (Hong Kong, UAE) advance stablecoin frameworks. Market reaction was muted; Circle shares rose after the announcement and broader crypto prices were mixed. Key keywords: stablecoin, stablecoin yields, CLARITY Act, banks, crypto regulation, deposit outflows, bank-backed digital currency, community banks.
Neutral
This development is market-neutral overall. It reduces legislative uncertainty by advancing talks but does not guarantee approval of yield-bearing stablecoins. Short-term: mixed — news of negotiations and potential compromises can support sentiment for stablecoin issuers (e.g., modest upside in related equities such as Circle) but also raises concerns about stricter limits if banks successfully press for controls, which can cap product yields and user demand. Traders may see increased volatility around negotiation milestones and legislative deadlines. Long-term: conditional — a negotiated framework that permits controlled yield-bearing stablecoins (for example, via bank partnerships, reserve custody rules or caps) could be modestly bullish for stablecoin adoption and DeFi lending primitives, whereas a ban or heavy restrictions would be bearish for yield-driven stablecoin products and could shift activity offshore. Overall, because the meeting narrows the path to a compromise but leaves major outcomes unresolved, price impact is likely muted until concrete legislative language or regulatory rules emerge.