White House Steps in as Stablecoin Talks Narrow on Yield & Enforcement

The White House took direct control of stablecoin policy discussions during a closed-door meeting on February 19, Thursday, narrowing the debate around rewards and yield as talks move closer to a potential agreement.

The details were shared by Eleanor Terrett, who reported that Thursday’s meeting was smaller than last week’s and marked a clear change in how discussions are being run.

Who attended the meeting

Crypto firms represented in the room included Coinbase, Ripple, and venture capital firm Andreessen Horowitz (A16z).

Trade groups attending included the Blockchain Association and the Crypto Council for Innovation.

No individual banks attended the meeting. Instead, views from the banking community were delivered through trade associations, including the American Bankers Association, the Bank Policy Institute, and the Independent Community Bankers of America.

White House sets the agenda

Terrett reported that the biggest difference in Thursday’s meeting was the White House taking the lead, rather than allowing crypto firms or banking trade groups to steer the discussion, as was the case in earlier sessions.

Patrick Witt, Executive Director of the White House Crypto Council, brought draft policy language that shaped the conversation. The draft addressed concerns banks raised last week in a document focused on yield and interest limits.

At the same time, the language made clear that any future limits on rewards would be narrow and specific.

Yield on idle balances off the table

One key issue now appears settled. According to Terrett’s reporting, “earning yield on idle balances… is effectively off the table,” even though it has been a key goal for the crypto industry.

The remaining debate has narrowed to whether crypto companies can offer rewards linked to certain activities, rather than paying yield simply for holding stablecoins.

After the meeting, public comments from attendees once again described the talks as “productive” and “constructive.”

Banks push back on competition

Terrett noted that one crypto-side attendee said bank concerns now appear to be driven more by competition than by fears of deposit flight, which had earlier been framed as the main risk.

On the other side, a bank-side source told Terrett that trade groups are still pushing to include a deposit outflow study in the draft. The study would examine the growth of payment stablecoins and their possible impact on bank deposits.

Enforcement powers and penalties

Terrett also reported that banks were encouraged by proposed anti-evasion language in the draft.

Under the proposal, enforcement authority would be shared by the Securities and Exchange Commission (SEC), the U.S. Department of the Treasury, and the Commodity Futures Trading Commission (CFTC).

Civil penalties could reach $500,000 per violation, per day, for firms that violate a ban on paying yield on idle balances.

What comes next

Bank trade groups are expected to brief their members on Thursday’s meeting and test whether a compromise is possible on allowing limited stablecoin rewards.

Terrett reported that “an end-of-month deadline doesn’t seem unrealistic,” with talks expected to continue in the coming days.

She also shared one additional detail highlighting the seriousness of the meeting: attendees were required to hand over their phones before entering the room.

Phones taken, stakes raised

Terrett also shared an additional detail that underscored the seriousness of the meeting.

“Extra nugget: Attendees were required to hand over their phones during the meeting,” she wrote.

She concluded, “It was serious biz today.”

Also Read: Fed’s Kashkari Slams Crypto ‘Word Salad,’ Questions Stablecoin Use