As previously reported, the White House crypto team met today with representatives from the banking industry and digital asset industry.
The rapid-response gathering came about after some crypto insiders stated they could not support the Crypto Market Infrastructure legislation scheduled for a markup hearing before the Senate Banking Committee. The Committee leadership quickly canceled the hearing as vested parties sought to advocate for different aspects of the legislation.
One of the biggest issues is the risk that stablecoin holders could generate returns. Payment stablecoins under the GENIUS Act must represent low-risk real-world assets, such as fiat currency and US Treasury bills. This means stablecoin reserves will generate interest, and crypto insiders want to share some of these returns with stablecoin holders. This all makes a lot of sense, as it benefits consumers.
Of course, legacy banks are concerned that this will prompt depositors to move funds away from these firms, thereby undermining the traditional banking model of holding consumer funds and paying little to no interest while lending at high rates to borrowers.
According to a post on X by Eleanor Terrett, attendees at the meeting included firms like Coinbase, Paxos, Kraken, Ripple, Tether, the Crypto Council for Innovation, the Digital Chamber, and others. Bank representatives included the American Bankers Association, the Bank Policy Institute, the Independent Community Bankers Association, and more. She also shared that the meeting was civil and included “no yelling.”
Sander Lutz posted on X that a deadline has been set for the end of February for both sides to work things out regarding stablecoin yield.
The Digital Chamber CEO, Cody Carbone, said the meeting made exactly the kind of progress needed to reach an agreement.
“We look forward to continuing this kind of work to ensure market structure rules of the road will become law before this Congress ends. Inaction is not an option, and we are committed to rolling up our sleeves and doing the hard work to ensure legislative progress does not punish innovators or consumers who see digital assets as a foundation for their financial future.”
The Crypto Council on Innovation said it is committed to continued engagement, with future meetings planned, and thanked White House organizers.
“As conversations continue, the priority remains the same: to further cement American leadership for payments innovation and to pass clear and durable market structure legislation that will allow for digital asset innovation to thrive in the U.S. and best protect consumers,” stated Ji Hun Kim, CEO of the Council.
Summer Mersinger of the Blockchain Association described the meeting as an important step forward.
“[the] Blockchain Association remains committed to working with policymakers across the aisle to get good legislation signed into law. And we will continue pushing for pro-innovation, pro-consumer policy that positions the United States at the forefront of global technological innovation and ensures the President’s vision of America as the crypto capital of the world is fully realized.”
No resolution yet.
At the same time, the path should be clear. Policymakers must level the playing field so the digital asset sector and legacy banking industry play by the same rules. This includes offering yield for stablecoin holders, something banks could easily do.
While the crypto discussion involves industry stakeholders, the Senate will ultimately draft the language with input from industry insiders. Hopefully, Senate staffers are already putting it together.