Crypto organization challenges Wall Street financiers with its own stablecoin guidelines for legislation.

Following the bankers’ submission of a document at the White House requesting a comprehensive prohibition on stablecoin yield, the crypto sector asserts the necessity for certain stablecoin incentives.

The Digital Chamber has provided a response to the bankers opposing stablecoin yield, and discussions may resume at the White House. (Jesse Hamilton/CoinDesk)

Key points:

• The crypto market structure bill in the U.S. Senate has faced delays due to a disagreement over an issue unrelated to market structure: stablecoin yield.
• The Digital Chamber is responding to a position paper distributed earlier this week by bankers who are against stablecoin yield.
• The principles document from the crypto organization claims that certain rewards are necessary for stablecoin operations, although it emphasizes that the industry should not pursue products that could directly undermine bank deposit activities.

The ongoing deadlock regarding stablecoin yields in the U.S. Senate’s crypto market structure bill has now been documented, and the crypto sector is maintaining its stance on the necessity for some form of rewards for stablecoin users.

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A meeting at the White House between Wall Street bankers and crypto leaders reached a standstill this week, despite administration officials encouraging both sides to seek a resolution. The banking representatives maintained their position against any form of stablecoin yield or reward, contending that such yields pose a risk to the deposit activities central to the U.S. banking system, as articulated in a one-page document titled “Yield and Interest Prohibition Principles.”

The Digital Chamber has now drafted its own principles and began distributing them on Friday, advocating for the inclusion of a section in the Senate Banking Committee’s draft bill that defines various scenarios in which rewards might be permissible. The latest document, acquired by CoinDesk, also states that the bankers’ proposal for a two-year study on the impact of stablecoins on deposits is acceptable, provided it does not lead to automatic regulatory rulemaking in response.

“We aim to convey to policymakers that we believe this represents a compromise,” stated Digital Chamber CEO Cody Carbone, in an interview on Friday. Through this document, the industry group is formally expressing its willingness to relinquish any claim resembling an interest payment for static stablecoin holdings, which would be akin to a bank savings account.

While the crypto industry has been developing stablecoin offerings permitted under last year’s Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, the bankers are attempting to amend that legislation with changes included in the forthcoming Digital Asset Market Clarity Act. However, the GENIUS Act is currently the prevailing law, so Carbone indicated that the industry’s concession regarding rewards on stablecoin holdings is considerable, and crypto companies should still be able to provide rewards when customers partake in transactions and other activities. He urged bankers to reconvene for further discussions.

“If they don’t engage in negotiations, the status quo remains, and rewards will continue as they are,” Carbone remarked, suggesting that his group’s broad membership—including banking representatives—could facilitate a more balanced discussion. “If they remain unyielding in their demand for a blanket prohibition, this situation will stagnate.”

He expressed hope that the Digital Chamber’s new position paper could revitalize the stalled negotiations that have hindered legislative progress since a last-minute disagreement disrupted a hearing on the bill in the banking committee a month prior.

“We hope to act as a mediator to reinvigorate this dialogue, as we represent a trade association that encompasses both sides,” Carbone noted.

The Digital Chamber’s principles on Friday emphasized two specific reward scenarios it seeks to safeguard—those linked to providing liquidity and those that promote ecosystem participation. The organization asserted that these two elements of the draft bill’s Section 404 are particularly crucial in decentralized finance (DeFi).

The White House is reportedly seeking a compromise by the end of this month. So far, the banking representatives have not shown any willingness to compromise in ongoing meetings, though Trump crypto advisor Patrick Witt mentioned in a Friday interview with Yahoo Finance that another meeting may be arranged for the following week.

“We are diligently working to address the concerns raised,” Witt informed Yahoo Finance, expressing that he has encouraged both parties to be flexible on the specifics.

“It’s regrettable that this has escalated into such a major issue,” he commented, explaining that the Clarity Act is not fundamentally about stablecoins, which is more appropriately addressed by the already-passed GENIUS Act. “Let’s approach this narrowly to focus on the specific issue of idle yield,” he added.

The Senate Agriculture Committee has already approved its own version of the Clarity Act, concentrating on the commodities aspect, while the Senate Banking Committee’s version is more focused on securities. If the banking committee follows the example set by the agriculture committee, it will advance the bill along partisan lines. However, for a final bill to be approved by the entire Senate, significant Democratic support will be necessary to meet the chamber’s 60-vote requirement.