⚖️ Washington tries to break the stablecoin stalemate

White House draws banks and crypto to same table, the fight is about stablecoins

In a closed‑door summit at the White House on February 10, Washington is trying to end an impasse that’s become a fight among industry titans over what most of us never see but manages more money than any sector in U.S. finance.

At center of it are stablecoins that pay yield.

It is the second meeting this month in an effort to find common ground after discussions on Feb. 2 failed to produce progress. The pressure is increasing in part because the CLARITY Act, a long‑synthesized crypto market structure bill, has stalled in the Senate and its chances of adoption are diminishing rapidly.

If there is still no agreement by the end of February, aides warned that the bill could slip off the legislative calendar altogether.

Why this fight matters

The banks and crypto firms are not debating a technical nuance. They are battling for the role of the default money layer of the internet.

High-ranking bank officials, including at JPMorgan Chase, have viewed yield‑bearing stablecoins as a direct threat to deposits.

Their worry is straightforward: if the Fed allows consumers to hold digital dollars that more than match the yields on savings accounts, capital could flow out of the banking system.

Banks have framed this as a systemic risk issue.

They argue that interest‑paying stablecoins amount to a shadow banking system without deposit insurance, lender‑of‑last‑resort assistance or the same level of capital reserves.

Crypto firms beg to differ.

They contend that outlawing yield on stablecoins would tether the U.S. to an antiquated financial structure just as global competition heats up.

Offshore issuers already provide yield and crypto leaders caution that pushing innovation abroad would only replicate the mistakes Washington made in prior market cycles.

That is why the question has become the primary roadblock to the CLARITY Act.mTo people using it, it’s cash that generates more than a bank account. To banks, that is deposits being drained from the system.

The CLARITY Act simplified

The CLARITY Act is intended to provide answers that America has avoided for decades:

• What’s a security and what’s a commodity

• Who’s in charge of what: the SEC or the CFTC

• How exchanges, custodians and stablecoin issuers should behave

The House passed it last year with bipartisan backing. The Senate hasn’t, mostly because lawmakers can’t agree on how much stablecoins should be permitted to do.

Why the White House is getting involved now

What began as a dispute between regulators has become an all out power struggle over the future of U.S. finance. With each side entrenched, the White House has gone from bystander to mediator.

Unlike the previous, exploratory meeting, Tuesday’s session is likely to feature the two camps’ top decision‑makers. Not to draft legislation, but to sketch an outline of a framework that would allow yield‑bearing stablecoins to exist without sparking a bank run.

Ideas floating privately include:

• Stricter reserve requirements related to Treasuries

• Restrictions on how yield is advertised

• Larger role for community banks as custodians or issuers of reserves

None of this is settled. But the mere fact of the meeting taking place shows how desperate the situation has become.

What happens next

If a consensus framework were to appear, the CLARITY Act might then get a fresh push and move this spring. If it doesn’t, lawmakers might abandon the stablecoin reform effort, and leave the U.S. in regulatory limbo as other nations put new rules on the books.

Either way, this meeting will dictate how and where, digital dollars are given permission to flourish.

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