Some crypto companies are proposing concessions on stablecoin yields to try to unfreeze stalled Senate negotiations over a contentious crypto market-structure bill.
The House advanced market-structure legislation, but talks in the Senate have faltered amid disagreement over whether stablecoin issuers should be allowed to offer yields. Banking groups argue yield-bearing products from crypto firms would compete with — and divert deposits from — traditional savings accounts.
According to people familiar with the discussions, crypto firms have floated measures to give community banks a larger role in the stablecoin ecosystem as a way to bridge differences. Proposed compromises include requiring stablecoin issuers to hold reserves at community banks and helping community banks issue their own stablecoins through partnerships with industry firms.
A White House meeting between crypto and banking representatives ended without agreement. Senate Banking Committee Chair Tim Scott told Fox News that allowing crypto firms to offer rewards can be positive, but firms should not market themselves as if they were banks. He said there will not be a deposit flight and that lawmakers will continue talks with consumer banks. “The good news is that both sides remain at the table […] we’re going to overcome those hurdles and make sure that America is the crypto capital of the world,” he said.
Legislatively, the path remains challenging. The Senate Agriculture Committee released a Republican draft of the market-structure bill in January and advanced the measure after a Jan. 29 markup, but that draft lacked Democratic support. To clear the full Senate and reach the president’s desk, the bill will need backing from at least seven Democrats. Meanwhile, the Senate Banking Committee’s markup contains a stricter version of the bill; the two committee versions must be reconciled before the legislation can proceed.
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