White House: Stablecoin Rewards “Gap Has Shrunk Considerably”
After third meeting on stablecoin yield, White House optimistic a compromise can be reached
Welcome to the Monday edition of the Crypto In America newsletter!
What you’ll read: The White House’s Crypto Council Executive Director details stablecoin yield talks; the SEC’s green light for broker-dealers holding stablecoins; and what’s on our radar this week.
The White House says it’s getting closer to breaking one of the biggest logjams holding up legislation on crypto market structure: whether crypto firms should be allowed to offer rewards on stablecoins.
Speaking to the Crypto In America team at ETHDenver on Friday, White House Crypto Council Executive Director Patrick Witt said the gap between the two sides has “shrunk considerably” after last week’s closed-door meeting between crypto and bank representatives.
At the center of the debate is whether crypto firms can offer rewards tied to stablecoin usage. Banks fear such rewards could trigger deposit outflows and create risk for the traditional financial system, while crypto companies argue overly restrictive rules would stifle innovation and give incumbents an unfair edge.
In the room were reps from Coinbase, Ripple, and venture firm Andreessen Horowitz, alongside trade groups Blockchain Association and Crypto Council for Innovation. Bank perspectives came via trade associations: the American Bankers Association, Bank Policy Institute, and Independent Community Bankers of America.
The White House took a more assertive role than in prior sessions, bringing draft legislative language to bridge the divide, sources at the meeting told Crypto In America. Attendees were required to hand over their phones during the discussion, and went through the draft text line by line. The draft addressed concerns raised in a recent banking framework on stablecoin yield restrictions, and made clear that any limits on rewards would be narrowly scoped.
“We wanted to bring the appropriate level of seriousness and decor (sic) to the meeting,” Witt told Crypto In America when asked about the no-phones rule.
One major takeaway from the discussions: offering yield on idle stablecoin balances, long viewed as a key objective for the crypto industry, is now effectively off the table. Instead, the debate has narrowed to whether crypto firms can offer rewards tied to certain activities, such as transactions or network participation. A banking source said proposed anti-evasion language could let the SEC, Treasury, and CFTC enforce a ban on idle-balance yield, with civil penalties of $500,000 per violation, per day.
Witt said the administration is aiming to resolve the stablecoin rewards dispute by March 1, giving both sides roughly a week. “Provided we continue to have good-faith engagement from both sides on this issue, I fully expect we will meet our deadline,” he said.
The bank lobby is expected to brief its members on the latest discussions, and gauge whether there’s room to compromise. It’s unclear whether a fourth meeting will take place this week.
Once a compromise is reached, the Senate Banking Committee can reschedule its postponed Jan. 15 markup, though Witt stressed that the timing will ultimately be decided by Chairman Tim Scott (R-SC). Much of the other reconciliation between stakeholders is already happening in parallel, meaning the process could move quickly once the draft language is finalized.
“I believe if we solve this, it’s going to start a domino effect here, and I think things could move pretty fast once it’s resolved,” Witt said.
On the issue of ethics, a lingering concern for some Senate Democrats over President Donald Trump’s family crypto dealings, Witt said negotiations are continuing, but noted it is not currently a major obstacle compared to the stablecoin rewards issue.
SEC FAQ Makes Stablecoins Count as Capital for Broker-Dealers
SEC staff of the Division of Trading and Markets made a small addition to a broker-dealer FAQ last week that thrilled the market.
What happened? Firms like Robinhood, Charles Schwab, and JPMorgan can now count most of their stablecoin holdings toward regulatory capital – the financial safety net that keeps a firm running if losses hit.
Specifically, the SEC says these firms only need to take a 2% “haircut” on stablecoins like USDC or USDT. That means 98% of their holdings can now count like cash or money market funds on their balance sheets, instead of being zeroed out completely.
What’s a “haircut”? It’s a mandatory discount regulators apply to an asset to figure out how much of it counts toward capital or lending requirements.
Before this change, holding stablecoins effectively penalized firms, limiting their ability to custody tokenized securities, provide liquidity or facilitate trading. Now, these tokens count as working capital, opening the door to smoother tokenized finance and more crypto business.
SEC Commissioner Hester Peirce said the change “makes it feasible for broker-dealers to engage in a broader range of activities relating to tokenized securities and other crypto assets.”
Important to note: Because this clarification comes from a staff-level FAQ rather than a formal rule, it could be reversed. Formal rulemaking or legislation — like the GENIUS and Clarity Acts — would make it much harder to undo.
“The 2% haircut FAQ, modest or arcane as it may appear, represents something larger: a federal securities regulator actively adapting its existing rules to accommodate stablecoins as functional financial instruments rather than merely tolerating their existence at the margins,” Tonya M. Evans, a digital asset legal expert and Penn State Dickinson Law professor, wrote in a recent Forbes op‑ed.
👀 What To Watch This Week
Monday
The House and Senate are back in session.
4:00 p.m.: Senators Steve Daines (R-MT), Cynthia Lummis (R-WY) and Congressman Mike Carey (R-OH) will host a joint roundtable on crypto tax.
Tuesday
9:15 a.m.: Fed Governor Christopher Waller will speak on the future of finance and payments at the 2026 Technology-Enabled Disruption Conference in Boston.
10:00 a.m.: The Conference Board will publish its consumer confidence index.
9:00 p.m.: President Donald Trump will deliver his State of the Union address.
Wednesday
Circle Internet Group, Cipher Mining, and Hut 8 will report earnings before the market opens. Nvidia and Core Scientific will report after the bell.
Thursday
10:00 a.m.: The Senate Banking Committee will host an oversight hearing with prudential banking regulators, including Michelle Bowman of the Federal Reserve, Jonathan Gould of the Office of the Comptroller of the Currency, Travis Hill of the Federal Deposit Insurance Corporation, and Kyle Hauptman of the National Credit Union Administration.
Friday
8:30 a.m.: The Bureau of Labor Statistics will publish a delayed inflation report with the January producer price index.
Remember, new editions of the Crypto In America newsletter drop every Monday and Wednesday.
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