Several cryptocurrency firms are proposing concessions on stablecoin yield practices to try to restart stalled Senate negotiations over a contentious market-structure bill.
The House moved forward with market-structure legislation earlier, but talks in the Senate have bogged down over whether stablecoin issuers should be allowed to offer yield-bearing products. Banking groups say yields on crypto products could compete with traditional savings accounts and draw deposits away from consumer banks.
People involved in the discussions say crypto companies have floated measures intended to give community banks a bigger role in the stablecoin ecosystem as a compromise. Suggested steps include requiring stablecoin issuers to place reserve funds at community banks and helping local banks issue their own stablecoins through partnerships with crypto firms.
A recent White House meeting between crypto industry and banking representatives ended without an agreement. Senate Banking Committee Chair Tim Scott has signaled that permitting rewards from crypto firms can have benefits but warned firms should not present themselves like banks. He also downplayed the likelihood of a large deposit flight and said talks with consumer banks will continue, noting both sides remain engaged in seeking a path forward.
Legislatively, the road ahead remains difficult. The Senate Agriculture Committee released a Republican draft of the market-structure bill in January and advanced it after a Jan. 29 markup, but that version lacked Democratic support. To pass the full Senate and reach the president’s desk, the bill would likely need backing from at least seven Democrats. At the same time, the Senate Banking Committee’s markup contains a tougher version of the proposal; lawmakers must reconcile the two committee drafts before the measure can proceed.
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