White House To Host Crypto And Banking Leaders In Push To Break Regulatory Deadlock

[Ben Graham]

The White House is set to bring together senior figures from the banking and crypto industries on Monday in an effort to break the deadlock over the crypto market structure bill, namely the CLARITY Act, according to a Reuters report. 

The planned meeting comes as progress on the bill has stalled amid growing tensions between the two sectors over how digital assets should be regulated.

White House Crypto Council To Lead Talks

People familiar with the matter said the meeting will be organized by the White House’s crypto council and will include executives from several industry trade groups. 

Discussions are expected to focus on one of the most contentious aspects of the legislation: whether and how crypto firms should be allowed to offer interest or other rewards on customer holdings of stablecoins. 

The anticipated market structure legislation has been under consideration in the Senate for several months. It is intended to establish a comprehensive federal framework for regulating digital assets following the passage of the GENIUS Act last July. 

Stablecoin Rewards Clash With Bank Stability Fears

The House of Representatives passed its version of the bill in July, but progress in the Senate has been slower. Earlier this month, the Senate Banking Committee was scheduled to debate and vote on the measure. 

However, the markup was postponed after cryptocurrency exchange Coinbase (COIN) withdrew its support for the bill and criticized various elements of it, including stablecoin rewards. Crypto representatives argue that offering rewards such as interest is essential to attracting and retaining customers. 

Banks, on the other hand, have raised alarms that allowing crypto platforms to pay yield on stablecoins could draw deposits away from insured lenders. Since deposits are the primary source of funding for most banks, industry representatives warn that a significant outflow could pose risks to financial stability.

Featured image from OpenArt, chart from TradingView.com