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High-stakes discussions between major U.S. banks and cryptocurrency executives at the White House reached a standstill yesterday, resulting in a deadlock regarding stablecoin yields.
Banks insisted on stringent “prohibition principles” concerning rewards for holders, while crypto representatives contended that such restrictions would hinder innovation within the digital dollar ecosystem.
Key Takeaways
- Banks are advocating for a comprehensive ban on all financial and non-financial incentives associated with holding payment stablecoins.
- Crypto companies, including Coinbase and Ripple, opposed the proposals, cautioning that they would impede competition.
- Treasury Secretary Scott Bessent faces a pressing deadline of July 2026 to finalize the implementation rules for the GENIUS Act.
Will Banking Interests Kill the Yield?
The primary conflict arises from the enforcement of the GENIUS Act, enacted in July 2025, which seeks to regulate stablecoin issuance while protecting traditional banking deposits.
Banks argue that interest-bearing stablecoins jeopardize their liquidity frameworks, expressing concerns about a significant withdrawal of deposits if users can obtain higher yields on-chain.
This regulatory struggle underscores the industry’s transition toward a compliance-oriented market where regulatory demands increasingly influence project feasibility.
The White House Crypto Policy Council is working diligently to establish a consensus. Yesterday’s meeting marked the second of the month. With legislators and the industry aiming to finalize regulations before the midterm elections this November, time is of the essence.
Banks are effectively attempting to shield their deposit base from digital rivals, a strategy that could diminish the competitive edge of non-bank stablecoin issuers.
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Inside the Closed-Door Battle at the White House
According to a document shared by the banking representatives during the meeting, which included Goldman Sachs and JPMorgan Chase, the banks outlined stringent “prohibition principles.”
NEW: Insights from the White House stablecoin yield meeting, according to banking and crypto sources present:
Participants from both sides described the meeting as ‘productive,’ yet no agreement was reached by the conclusion. However, specific deal details were discussed more thoroughly… pic.twitter.com/w5nPlG1DLi— Eleanor Terrett (@EleanorTerrett) February 11, 2026
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These principles advocate for a complete prohibition on any benefits, whether financial or otherwise, linked to holding or utilizing payment stablecoins. Attendees observed that banks maintained a firm stance, demanding enforcement measures that extend well beyond the current draft of the market structure bill.
While existing legislative drafts generally prohibit passive yield, banks seek to eliminate even limited activity-based rewards.
Crypto stakeholders, including the Blockchain Association and Ripple, reportedly “dug in” against these demands.
The banking sector asserts that exemptions for stablecoin rewards must be extremely limited, leaving minimal space for the types of incentive programs that foster DeFi adoption.
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Implications for the Market
If these restrictions are upheld, the U.S. risks hindering the very innovation that the GENIUS Act was designed to support.
Investors should closely monitor the July deadline; a failure to reach a compromise could drive capital to jurisdictions with clearer, pro-yield regulations.
Similar to how Venezuela’s anti-corruption investigation disrupted its local crypto sector with aggressive shutdowns, a stringent U.S. ban on stablecoin yields could significantly affect domestic liquidity.
While banks aim to safeguard their deposit base from disruption, the crypto market regards yield as an essential characteristic, not a flaw.
If banks prevail in this instance, the functionality of U.S.-regulated stablecoins could be limited to basic transaction capabilities, stripping them of their investment potential.
Yesterday at the White House, bankers presented their list of demands regarding stablecoin yield. TL;DR, banks are aware of their precarious position.
Summary:
The GENIUS Act categorizes payment stablecoins strictly as payment instruments, not as deposit or investment products. To prevent… pic.twitter.com/vQbIDaRd9U— Carlo
(@CarloD_Angelo) February 11, 2026
(@CarloD_Angelo) February 11, 2026Discover: February’s best crypto presales
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