Administration pushes for compromise on yield provisions to unblock market structure legislation, urging banking representatives to accept activity-based incentives.
Washington, D.C. – February 20, 2026 – The White House convened its third closed-door meeting with cryptocurrency industry executives and banking representatives on Thursday to resolve remaining disputes over stablecoin yield provisions in the proposed Digital Asset Market Clarity Act. Sources familiar with the talks indicate the administration is advocating for permitting limited, activity-based rewards while prohibiting passive yield on idle stablecoin holdings.
The meeting, which extended beyond its scheduled two-hour duration, included Coinbase Chief Legal Officer Paul Grewal, Ripple Chief Legal Officer Stuart Alderoty, a16z Crypto Policy Head Miles Jennings, and representatives from banking trade associations . White House crypto advisor Patrick Witt led the administration’s negotiating team .
According to participants, the discussion focused on draft text circulated by the White House that would prohibit automatic interest accrual on static stablecoin balances while potentially allowing rewards tied to specific transactions or activities . This approach represents a middle ground between the banking sector’s demand for a broad ban on all yield mechanisms and the crypto industry’s preference for fewer restrictions.
“The dialogue was constructive and the tone cooperative,” Grewal wrote on social media following the session, noting that “more progress” was achieved . Blockchain Association CEO Summer Mersinger described it as “a constructive step forward in resolving outstanding issues related to rewards and keeping market structure legislation on track” .
The dispute over stablecoin yield has emerged as a primary obstacle to advancing the Clarity Act, which represents the crypto industry’s top legislative priority. Banking representatives have argued that rewards programs threaten their core deposit business model, while crypto firms maintain that yield restrictions could limit innovation and consumer choice .
Thursday’s session differed from previous meetings in that White House officials actively led negotiations rather than facilitating discussion between the two sides, according to people briefed on the talks . Participants’ phones were collected as administration officials encouraged stakeholders to remain until common ground emerged .
The proposed compromise would effectively modify provisions in the existing GENIUS Act, signed into law in July 2025, which established the federal regulatory framework for payment stablecoins but left certain yield questions unresolved . Banking representatives at Thursday’s meeting reportedly worked on specific language addressing their concerns, with anti-avoidance provisions that would empower the SEC, Treasury, and CFTC to enforce yield prohibitions, including potential civil penalties of $500,000 per day for violations .
Democratic lawmakers have attached additional conditions to their support for the legislation, including requirements that senior government officials divest from significant crypto interests—a provision aimed at President Donald Trump—and that the White House fill vacant commissioner positions at the CFTC and SEC .
Senate Banking Committee leadership has indicated that a hearing to advance the bill remains contingent on resolving these outstanding issues. While the Senate Agriculture Committee previously approved its version of related legislation along party lines, broader Senate passage would require significant Democratic support .
Why this matters: The resolution of the stablecoin yield dispute would remove a key barrier to comprehensive U.S. crypto market structure legislation. From a regulatory structure perspective, permitting activity-based rewards while banning passive yield would create distinct boundaries between stablecoins and interest-bearing deposits, potentially preserving the banking sector’s traditional role while providing clear compliance parameters for crypto platforms. The outcome will determine whether stablecoins function primarily as settlement vehicles or evolve into yield-bearing instruments, affecting competitive dynamics between incumbent financial institutions and crypto-native firms.