Negotiations over a major U.S. crypto bill have hit an impasse. Large banks say they cannot support a White House compromise on stablecoin “rewards,” raising doubts the legislation will clear Congress this year. The fight matters for payments because stablecoins are typically dollar-linked tokens used for digital transfers.
In an analysis carried by Yahoo Finance, Reuters reported March 5 that talks on the Clarity Act stalled after lenders rejected the compromise. President Donald Trump criticized banks on Truth Social and said he would not let them “undermine” his crypto agenda. The bill had already become bogged down in January, Reuters said, when banks opposed language that would let stablecoin issuers and crypto firms pay interest-like rewards that could draw deposits out of banks and make lending harder.
Crypto firms, including Coinbase, argue rewards are needed to compete for customers. Reuters cited a Standard Chartered estimate that stablecoins could pull about $500 billion in deposits from U.S. banks by the end of 2028. The White House proposal would allow rewards in limited cases, such as peer-to-peer payments, but not on balances that sit unused. Crypto companies have largely accepted that framework, Reuters said, but banks still want tighter limits.
In a statement cited by Reuters, the American Bankers Association warned: “The risks to economic growth and financial stability are real if policymakers don’t get this right.”
The deadlock goes beyond rewards. Reuters reported the bill would need at least seven Democrats to pass the Senate. Some Democrats want limits on elected officials profiting from crypto ventures. Others want tougher rules to prevent money laundering. Any final text would also need to be reconciled between the Senate Banking and Senate Agriculture committees. Floor time is tight ahead of summer campaigning and the midterm elections.
The Clarity Act aims to define when a token is treated as a security or a commodity and to reduce the regulatory “gray area” that crypto executives say has slowed adoption, Reuters reported. The industry spent more than $119 million backing pro-crypto candidates in 2024, hoping to move this bill and a separate stablecoin measure that became law last year. Reuters cautioned that the bill’s odds could shrink further if Democrats gain seats in November. What to watch now is whether negotiators can settle the stablecoin rewards issue soon enough for a Senate vote.