Crypto‑Bank Lobbyists Convene for Third Time at the White House to Break Stablecoin Stalemate
Washington, D.C., Feb. 20, 2026 – Representatives from the cryptocurrency industry and the U.S. banking sector gathered at the White House for a third round of negotiations this month, aiming to untangle the stablecoin‑reward provisions that have stalled the Senate’s market‑structure bill. While no formal agreement emerged, participants described the session as “constructive” and signaled possible movement on a key compromise that could clear the path for legislation.
Background
The Senate is preparing a bill that would set the regulatory framework for digital assets, mirroring the House‑passed CLARITY Act enacted last summer. A persistent obstacle has been how stablecoins—digital tokens pegged to fiat currencies—may be used to pay interest‑like rewards to users. Banking groups contend that rewarding holders on the basis of their balances could siphon deposits away from traditional banks, whereas crypto firms argue that such incentives are essential for broader adoption.
The White House first convened crypto and banking lobbyists on Feb. 2, followed by a second meeting on Feb. 10. The latest session, held on Thursday, brought together senior executives from leading exchanges and issuers, as well as representatives from the Bank Policy Institute, the American Bankers Association and the Independent Community Bankers of America.
What Was Discussed
White House cryptocurrency adviser Patrick Witt steered the conversation toward a proposal previously floated by the administration: allowing third‑party platforms—such as exchanges—to offer stablecoin rewards tied to transactional activity rather than to the amount of stablecoins held in an account. This approach would preserve the incentive for usage while addressing banks’ concerns about competitive pressure on deposits.
- Crypto side – Coinbase’s chief legal officer, Paul Grewal, described the tone of the meeting as cooperative, noting that both sides “rolled up their sleeves” to review specific language. Ripple’s chief legal officer, Stuart Alderoty, echoed the sentiment, saying the parties made progress on the wording of the reward clause.
- Banking side – Sources who attended the briefing, speaking on condition of anonymity, indicated that their primary worry is not a sudden outflow of deposits but rather the long‑term competitive dynamics that reward‑bearing stablecoins could introduce.
The banks are slated to reconvene internally tomorrow to decide whether the activity‑based reward model is acceptable, and further discussions are expected to continue over the next several days.
Analysis
The stablecoin‑reward issue sits at the intersection of two competing policy goals:
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Financial stability – Regulators and banks fear that a lucrative yield on “idle” stablecoins could encourage a mass migration of deposits from regulated banks to privately‑issued digital assets, potentially amplifying systemic risk. Treasury estimates released in April suggested that full‑scale stablecoin adoption could trigger up to $6.6 trillion in deposit outflows.
- Innovation and market adoption – The crypto industry argues that reward mechanisms are a proven tool for driving user engagement and liquidity. Without the ability to offer yield, stablecoins may struggle to compete with traditional money‑market products, slowing the integration of digital assets into everyday payments.
By shifting the reward metric from balance‑based to activity‑based, policymakers aim to strike a middle ground: users are still incentivized to transact, but the “idle‑balance” arbitrage that banks fear would be curtailed. If the banks accept this compromise, it could unlock the Senate’s ability to move the bill out of committee and onto the floor for a vote.
However, the proposal’s viability hinges on several unresolved questions:
- Definition of “activity” – Will any on‑chain transaction count, or will the reward be limited to specific types of usage (e.g., payments to merchants, DeFi interactions)?
- Compliance oversight – How will regulators verify that platforms are correctly applying the activity‑based model, and what reporting requirements will be imposed?
- International parity – Other jurisdictions are already experimenting with balance‑based reward structures; U.S. policy could create a divergent regulatory environment that affects cross‑border stablecoin flows.
Key Takeaways
- Third White House meeting focused on a trade‑off: reward stablecoin holders based on transaction activity, not on the size of their balances.
- Crypto executives (Coinbase, Ripple) reported constructive dialogue and progress on bill language, while banking groups remained cautious, citing competitive concerns.
- White House adviser Patrick Witt championed the activity‑linked reward proposal, positioning it as a potential solution to the stalemate.
- Banks will deliberate internally tomorrow; their decision will dictate whether the bill can advance in the Senate Banking Committee.
- Potential impact – Acceptance of the compromise could pave the way for the first comprehensive U.S. crypto‑market‑structure legislation, shaping how stablecoins are regulated and integrated into the broader financial system.
The coming days will reveal whether the activity‑based reward model can bridge the divide between the crypto sector’s growth ambitions and the banking industry’s demand for financial stability. If successful, the Senate may finally have the bipartisan footing it needs to move the crypto market‑structure bill forward.
Source: https://cointelegraph.com/news/crypto-banks-meet-white-house-stablecoin-rewards?utm_source=rss_feed&utm_medium=feed&utm_campaign=rss_partner_inbound
