Clash over interest payments pits Wall Street against digital asset firms as Clarity Act stalls
A growing showdown between major U.S. banks and the crypto industry is threatening to derail landmark digital asset legislation in Washington. At the center of the dispute is whether companies should be allowed to pay interest, or “yield,” on customer stablecoin balances — a feature crypto firms view as essential for adoption but banks see as a direct threat to traditional deposits.
During a second round of closed-door talks hosted by the White House’s crypto council, representatives from leading banks including JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs, and PNC Financial Services presented a document calling for a prohibition on stablecoin issuers offering any financial or non-financial consideration to holders. Crypto representatives, including Coinbase Global, were also in attendance.
The proposal argues that allowing interest payments on stablecoins could trigger “deposit flight,” draining funds from banks and undermining lending to households and small businesses. Banking trade groups emphasized that innovation must not come at the expense of financial stability or the deposit base that supports Main Street credit.
The dispute has become the primary obstacle to advancing the Clarity Act, legislation intended to build on last summer’s GENIUS Act and establish a comprehensive federal framework for regulating dollar-pegged stablecoins. While the White House hoped to move the bill forward before the midterm elections, Senate Banking Committee hearings have now been postponed multiple times.
Crypto advocates counter that yield-bearing stablecoins are critical to driving broader use of digital dollars. Platforms like Coinbase and Kraken already offer such products, arguing they provide consumers with competitive returns and increased financial flexibility. Industry groups described the White House discussions as constructive but acknowledged that key differences remain unresolved.
Treasury Secretary Scott Bessent has publicly urged lawmakers to finalize the Clarity Act, warning that prolonged uncertainty could hinder the growth of U.S.-based digital asset innovation. Yet for banks, the stakes are existential. With regulators easing pathways for crypto firms to obtain banking charters and access the Federal Reserve system, the battle over stablecoin interest represents a broader struggle over the future shape of the financial system.
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