No Compromise on Stablecoin Yield as Banks Push Total Ban, Stalling CLARITY Act Talks

White House stablecoin yield talks end in an impasse

Representatives from Coinbase, Ripple, and Circle entered Tuesday’s session looking for a compromise on stablecoin yield, the incentives that help keep balances in products such as USDC, but banking representatives including JPMorgan Chase, Goldman Sachs, and Citigroup and industry trade groups rejected negotiating from the existing draft, people familiar with the meeting said.

Market snapshot: Data showed bitcoin around $66,289, up about 4.8% over 24 hours, and ether near $1,935, up about 3.6%, while UNI traded around $3.22 after a 21.3% 24 hour move.

Odds of bitcoin’s price going under $60,000 by the end of February are now at 39% on the prediction markets, up 5% since yesterday.

Will Bitcoin go under $60K by end of February? Live

39% chance

Yes

No

One participant described the meeting as “productive,” but said it ended without agreement and with both sides still far apart on what any stablecoin incentives framework should allow.

The banking side instead circulated a written “principles” document calling for what people familiar with the text described as a “complete ban” on yield, rewards, bonuses, and other incentives for holding or using stablecoins, with enforcement provisions designed to prevent workarounds. The document was not publicly released, and it was not immediately clear which organizations authored it or whether it reflected a unified position across all participating banks.

The standoff follows a broader push for U.S. market structure legislation, including the draft CLARITY Act text in H.R. 3633, that we covered Tuesday in Scott Bessent Says Coinbase Is Blocking the Crypto Bill. People familiar with the talks said White House crypto policy staff pressed both sides to return with proposed bill language by the end of February, or March 1 at the latest.

Banks cite deposit flight risk from yield-bearing stablecoins

Stablecoin rewards have become a proxy fight over who controls cash-like balances in the digital dollar economy. On some platforms, advertised stablecoin yields have been in the 3% to 5% range, compared with near-zero rates at many traditional savings accounts, a spread banks argue could accelerate deposit outflows, potentially into the trillions of dollars, if stablecoins are treated like a widely available alternative to bank funding.

Bank representatives warned that large-scale migration of balances could weaken lending and credit creation, and they argued that policymakers should treat yield-like features as a line that cannot be crossed in any stablecoin regime. Crypto advocates countered that a sweeping ban would protect incumbent funding models, reduce incentives to keep users in compliant venues, and limit experimentation in payment and settlement products that operate with transparent, on-chain rails.

Even if issuers do not pay “interest” directly, rewards can still function as a yield in the eyes of consumers and lawmakers, which is why negotiators focused on how programs are labeled, who funds them, and what exceptions might be allowed. People familiar with the discussions said banks signaled only narrow carve-outs, such as tightly defined transaction-based perks, and pushed for penalties for attempts to repackage rewards through affiliates or other structures.

In practice, stablecoin incentives can take multiple forms, including platform-funded rewards programs or products that pass through some of the interest generated by reserve assets, and the meeting did not publicly clarify how draft bill language would draw lines between those models.

CLARITY Act timeline faces a late-February drafting deadline

The outcome leaves the CLARITY Act caught in a bottleneck inside the Senate Banking Committee, where a markup schedule was not immediately clear on the committee’s public markups calendar, and participants described no near-term path to bridging the yield fight. Supporters view the bill as a way to formalize how digital assets are overseen in the U.S. and to set clearer rules for stablecoins and other market structure issues, but negotiators said stablecoin incentives remain the hardest unresolved point.

Without a committee markup, the legislation cannot move to a floor vote, which is why the White House deadline for draft language is a key test of whether negotiators can narrow the dispute enough for Senate staff to advance a package.

The yield dispute is also landing in a broader regulatory moment, with state and federal actions sending mixed signals about how quickly policy can move. Virginia lawmakers, for example, recently stopped a proposed strategic bitcoin reserve in a committee vote, a reminder that crypto politics can turn on narrow procedural fights and shifting coalitions, as we reported in Virginia Senate KILLS Cryptocurrency Reserve Bill Despite Online Hype.

For readers tracking the bigger policy map, our guide to US Crypto Regulation 2026 breaks down where stablecoins sit alongside SEC, CFTC, and Treasury rules. For now, the key unknown is whether banks soften their stance enough to allow any stablecoin rewards framework, or whether crypto firms accept restrictions that effectively eliminate yield as a mainstream feature of dollar tokens.

What to watch next is whether negotiators produce draft legislative language by late February or March 1, and whether Senate Banking schedules a markup that can restart momentum. Until then, stablecoin yield is likely to remain the single issue capable of delaying the broader clarity package that much of the industry has been counting on.