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Opponents of cryptocurrency banking declined to engage in recent White House discussions regarding the legislation.
Stablecoin rewards initiatives were the focal point of a work session at the White House involving representatives from the cryptocurrency sector and banking officials.
The White House convened a new discussion to address differences regarding stablecoin yield between financial institutions and crypto executives. (Jesse Hamilton/CoinDesk)
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What to know:
- Officials from leading U.S. banks gathered at the White House to engage with negotiators from the cryptocurrency sector in search of a consensus on the Senate’s crypto market structure legislation.
- This recent meeting concerning the Clarity Act did not yield the desired compromise, with sources indicating that the banking representatives were not inclined to seek common ground.
Negotiators from the crypto industry arrived at the White House on Tuesday prepared to discuss a legislative agreement on stablecoin yields, but their banking counterparts were still not ready to make concessions regarding the Senate’s crypto market structure bill, according to an individual familiar with the discussions.
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The dispute over whether stablecoins should be allowed to provide rewards—a lobbying conflict between Wall Street bankers and crypto advocates—is a significant obstacle preventing the Senate Banking Committee from moving forward with the Digital Asset Market Clarity Act. This issue has persisted for months, with the banking sector maintaining its stance against permitting reward activities and more, despite the White House’s insistence last week that both parties should come prepared with proposals for compromise.
The crypto delegation reportedly included executives from Coinbase, Ripple, a16z, the Crypto Council for Innovation, and the Blockchain Association, according to sources familiar with the arrangements. The White House aimed to limit the number of attendees at the latest meeting held there last week, which had not made notable progress on the matter of stablecoin rewards programs, crucial to the business models of crypto platforms.
Despite the absence of significant advancements, crypto representatives expressed optimism in their remarks regarding the meeting.
"We’re encouraged by the progress being made as stakeholders remain constructively engaged on resolving outstanding issues," stated Blockchain Association CEO Summer Mersinger, who was reported to have attended the meeting.
"The important work continues," remarked Ji Kim, the CEO of CCI, in a statement following the meeting, expressing his group’s appreciation for the banking sector’s ongoing engagement.
Before the Senate can pass a bill, the banking committee must approve it through a majority vote. The legislation already has the necessary support from the Senate Agriculture Committee, and a similar bill with the same title was passed in the House of Representatives last year. However, bankers have expressed concerns that stablecoin yields and rewards could jeopardize the deposit business that is central to their industry.
Nonetheless, stablecoin yield was not the only critical issue. Senate Democratic negotiators have insisted that the initiative includes a prohibition on significant crypto involvement from senior government officials, primarily driven by former President Donald Trump’s personal interests in cryptocurrency. The Democratic lawmakers have also demanded enhanced safeguards against the use of cryptocurrency in illicit financing and that the Commodity Futures Trading Commission be fully staffed with commissioners—including Democratic appointees—before it can proceed with crypto regulations.
While Trump’s crypto adviser, Patrick Witt, has suggested that negotiators will reach an agreement soon, he also informed CoinDesk that the White House would not support any initiative targeting the president. Witt was said to have led the meeting on Tuesday, as he did the previous week.
The Clarity Act encounters several practical hurdles beyond policy disagreements, including ongoing tensions in the Senate regarding a remaining budget issue: the funding for the Department of Homeland Security, which oversees Immigration and Customs Enforcement (ICE). The Senate consistently poses challenges in securing essential floor time to advance legislation, and as the chamber approaches the lengthy recesses before the midterm elections this year, it becomes increasingly difficult to allocate sufficient time to address a significant crypto bill.
Read More: Crypto industry, banks not yet close to stablecoin yield deal at White House meeting
