This week, U.S. banks have adopted a more assertive stance in their confrontation with the cryptocurrency industry, a standoff that has resulted in the delay of key related legislation in Congress. During a second round of private negotiations hosted by the White House Crypto Council, the U.S. banking sector submitted a document advocating for a ban on companies or other entities paying interest to customers on their stablecoin balances. According to an informed source, this document served as the basis for discussion on the relevant topic during Tuesday's meeting, which is a major sticking point preventing the advancement of the Digital Asset Market Clarity Act of 2025 through Congress. The source indicated that attendees at this White House meeting included representatives from banking and crypto industry associations, as well as policy staff from several major U.S. banks such as JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs, PNC Financial Services Group, and representatives from the cryptocurrency exchange Coinbase.
Last summer, President Trump signed the Guiding and Establishing National Innovation for Stablecoins Act, laying the legislative groundwork for the first federal regulatory framework targeting dollar-pegged stablecoins. Since then, a dispute over whether crypto platforms can pay "yield" (effectively interest) to users on their stablecoin balances has caused the Digital Asset Market Clarity Act of 2025 to stall. The Trump administration had initially hoped the bill would pass before the midterm elections. Stablecoins are cryptocurrencies whose value is pegged to the U.S. dollar, gold, or other fiat currencies and assets.
The document states: "No person shall provide any form of financial or non-financial consideration to a holder of a payment stablecoin for purchasing, using, owning, holding, custodying, retaining, or maintaining a payment stablecoin." It calls for "extremely limited" exemptions to this prohibition and warns that allowing interest on stablecoins would "lead to deposit outflows, thereby weakening credit availability for Main Street." The document further stipulates that regulators must enforce the ban and have the authority to fine non-compliant companies; it also requires a study on payment stablecoins to be conducted two years after the bill takes effect.
In a joint statement issued Tuesday evening, the American Bankers Association, the Bank Policy Institute, and the Independent Community Bankers of America urged that policy "can and must embrace financial innovation without compromising financial safety and soundness or endangering the bank deposits that support local credit and economic activity." Following the meeting, Summer Mersinger, CEO of the crypto advocacy group Blockchain Association, stated, "Parties continue to work constructively to resolve outstanding issues, and the progress is encouraging." Another crypto advocacy leader, Ji Hun Kim, CEO of the Innovate Crypto Council, also described the meeting as "constructive."
For the banking industry, interest payments on stablecoin balances represent an existential threat to bank deposits, with mid-sized and community banks expected to be hit the hardest, potentially weakening their ability to lend to the real economy. This conflict is not the only crypto-related issue raised by the banking industry in recent months. Regulatory agencies under the Trump administration are simultaneously attempting to lower the barriers for crypto companies to obtain bank charters and accounts within the Federal Reserve's payment system.
For the crypto industry, stablecoin policy is a crucial element for driving the widespread adoption of its most mainstream product—dollar-pegged stablecoins. The pressure to resolve this issue is not solely coming from the White House Crypto Council. U.S. Treasury Secretary Scott Bessent said on Sunday, "For crypto assets to remain viable and continue to develop, we must pass this Digital Asset Market Clarity Act of 2025." Since early January, the Senate Banking Committee has twice postponed scheduled hearings for the stalled bill. The most recent delay occurred just hours after Coinbase CEO Brian Armstrong rejected the latest draft due to compromises on key provisions. Bessent added, "A small stubborn faction says, 'We'd rather have no legislation than a bill we don't want.' I believe the banking community and other crypto firms have united against these individuals."
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