Crypto firms pitch stablecoin yield curbs to win Senate

Crypto firms are proposing a larger role for community banks in the stablecoin market, holding reserves and partnering on issuance, in an effort to break a Senate standoff over whether issuers can pay yields, Bloomberg reports. A White House meeting with crypto and banking groups on Monday ended without an agreement, according to people briefed on the talks.

People familiar with the negotiations pointed to concessions that include requiring stablecoin issuers to keep reserves at community banks and helping those banks issue their own tokens through partnerships. The goal is to address concerns from lenders who argue that yield-bearing stablecoins could compete with insured savings accounts.

Discussions are set to continue on Capitol Hill as lawmakers work to reconcile competing drafts of a broader crypto market-structure bill.

On Wednesday, Senate Banking Committee Chair Tim Scott called allowing crypto firms to offer rewards “a good thing,” while stressing that issuers “cannot advertise as if they were banks.” He added, “There will not be a deposit flight.” Scott expects to sit down with consumer banks again next week, noting that both sides remain at the table and voicing an aim to “overcome those hurdles and make sure that America is the crypto capital of the world.”

The House has advanced a market-structure bill. In the Senate, two approaches are moving in parallel. The Senate Agriculture Committee released a Republican draft in January and advanced it after a Jan. 29 markup, but it did not draw Democratic backing. To clear the full chamber and reach President Trump, the bill will need support from at least seven Democrats.

Separately, the Senate Banking Committee is pursuing a stricter version. The two drafts must be aligned before the legislation can proceed, and no agreement has been reached on stablecoin yields or the role of banks.

As we reported earlier, Galaxy Digital CEO Mike Novogratz said the main obstacle to a U.S. crypto market structure bill is a fight over customer cash between banks and crypto platforms. In a post on X, he said the bill could collapse because lawmakers and lobbyists cannot agree on whether stablecoin holders should be allowed to earn yield. He argued banks oppose yields on stablecoins because they would compete with deposits and drain liquidity from traditional accounts.