White House Stablecoin Talks Stall as Banks Push to Ban Yield — What It Means for U.S. Crypto Rules

White House-hosted talks between major banks and crypto executives ended without compromise on February 10. Stablecoin "yield" remains the sticking point keeping the CLARITY Act on ice. No resolution was reached despite pressure from President Trump's crypto advisers.

Stablecoins are digital currencies pegged to assets like the U.S. dollar. They're designed to hold stable value, making them useful for payments and trading.

Crypto executives came ready to negotiate. Attendees included Coinbase, Ripple, a16z, Circle, Paxos, and the Blockchain Association. They argued banning rewards would stifle competition.

Coinbase Chief Legal Officer Paul Grewal said "crypto showed up ready for work." Ripple's Stuart Alderoty posted that "compromise is in the air." But the crypto side didn't bring prohibition principles. They offered alternative proposals for broader permissible activity.

The CLARITY Act passed the House last year and has the Senate Agriculture Committee backing. But the Senate Banking Committee markup stalled in January after 130 amendments. Coinbase withdrew support over yield prohibitions.

Avoiding headline-driven mistakes becomes critical during regulatory uncertainty.

The GENIUS Act, signed July 2025, banned stablecoin issuers from paying interest directly. But banks say it left a loophole. Third parties like exchanges could still pay yield.

Senate Democrats added separate demands. They want bans on Trump's crypto involvement, stronger illicit finance protections, and full CFTC staffing before advancing regulations.

Standard Chartered warned U.S. banks could lose $500 billion in deposits to stablecoins by 2028. Geoff Kendrick, the bank's digital assets research head, identified regional banks as most exposed. They rely heavily on deposit-driven income.

The stablecoin market could hit $2 trillion by 2028. One-third would come from developed market bank deposits. Bank of America CEO Brian Moynihan warned $6 trillion could migrate if stablecoins pay interest.

The issue pits risk management against competition. Banks frame restrictions as protecting stability. Crypto firms see anti-competitive barriers.

Tether holds 0.02% of reserves in bank deposits. Circle holds 14.5%. Most reserves sit in Treasuries, so little money flows back to banks.

Crypto firms pushed back. BitGo CEO Mike Belshe said the GENIUS Act already settled issuer-yield. "Both sides should stop re-litigating GENIUS. Market structure has nothing to do with yield and must not be delayed further."

Participants described the session as productive despite no deal. The White House set a March 1 deadline for compromise language. Watch for:

• Next White House session: More meetings expected before March 1.

• CLARITY Act movement: Senate Banking Committee markup postponed, not rescheduled.

• GENIUS Act implementation: Treasury finalizes rules by July 2026.

• Coinbase position: Its stance influences broader crypto alignment.

The stablecoin market cap sits above $300 billion. If tight restrictions pass, growth projections change. If yield stays permitted, banks face deposit flight.

Senate Democrats can block markup. Regional banks face greatest exposure due to deposit reliance. The outcome shapes U.S. crypto structure for years. For Mubite traders, regulatory uncertainty creates complexity. Policy shifts can affect stablecoin liquidity quickly.