Coinbase CEO Confident of 'Win-Win-Win' Deal Between White House, Banks, Crypto

The second meeting of the White House on stablecoin rules ended without an agreement between banks and crypto firms. The talks focused on whether stablecoins should offer yield or rewards to users. Banks pushed for strict limits and even a full ban on yield features, while crypto companies argued that rewards are key for adoption and on-chain finance according to reports.

High-stakes negotiations between U.S. banking giants and crypto executives at the White House hit a wall, ending in an impasse over stablecoin yields. Banks demanded restrictive 'prohibition principles' on holder rewards, while crypto leaders argued such bans would suffocate innovation in the digital dollar economy as reported.

The White House meeting on stablecoin yield ended without a clear resolution as attendees clashed on broader restrictions set out by the banking sector. Banks remain adamant about restricting stablecoin yield, demanding tighter controls than those outlined in the bill's latest draft text according to analysis.

Why Did This Happen?

Banks fear that interest-bearing stablecoins could pull deposits away from traditional accounts, potentially reducing lending to households and small businesses. They presented a written set of 'prohibition principles' calling for a broad ban on any financial or non-financial rewards tied to holding, owning, or using payment stablecoins as noted.

Crypto firms, including Coinbase and Ripple, rejected the proposals, warning they would stifle competition. The core friction stems from the implementation of the GENIUS Act, signed in July 2025, which aims to regulate stablecoin issuance while insulating traditional banking deposits according to reports.

The White House emphasizes the urgency of passing the Clarity Act to provide regulatory clarity for the crypto market. Patrick Witt, a top adviser, warns that the window is rapidly closing due to midterms, and without clear guidelines, market volatility and hesitation among financial institutions persist as stated.

What Are Analysts Watching Next?

Without a deal, stablecoins may end up limited to basic payment functions, potentially slowing growth in the on-chain dollar economy. Crypto firms warn that strict bans could push activity offshore, as innovation may move to regions with friendlier rules according to analysis.

The Senate Banking Committee postponed a markup session due to disagreements over a proposal to ban interest on stablecoins. The banking industry sees this as a risk to traditional banking, while the crypto sector argues it would stifle competition as reported.

Coinbase CEO Brian Armstrong supports the need for clear rules and believes a win-win outcome is achievable. The bill aims to define which digital assets fall under the SEC or CFTC, reducing uncertainty for investors and financial institutions according to analysis.

Investors should watch the July deadline closely; failure to compromise could force capital to flee to jurisdictions with clearer, pro-yield frameworks. If the banks win this round, the utility of U.S.-regulated stablecoins could be capped at simple transaction rails, stripping them of their investment potential as reported.

The CFTC recently updated its policy to include national trust banks as permitted stablecoin issuers. Hong Kong plans to issue its first stablecoin licenses in March as it promotes digital asset innovation. In contrast, China has confirmed its ban on stablecoins and is focusing on its central bank digital currency according to reports.