Washington’s Stablecoin Showdown: A Quiet Meeting That Revealed a Growing Financial Rift
Another closed-door meeting at the White House ended the way many do — without a deal. That alone would not raise eyebrows in Washington. What made this session different was how quickly the discussion froze once the real conflict surfaced.
At the center of the dispute was a deceptively simple question: Should stablecoins be allowed to offer rewards to holders?
Behind that question lies a deeper struggle over who controls the future of money.
Stablecoins, unlike bitcoin and other volatile cryptocurrencies, are designed to hold steady in value, often pegged to the U.S. dollar. Their promise is stability in a digital world. But many crypto companies want to go further, attaching reward programs that resemble interest payments in traditional finance.
To the crypto industry, this feels like the natural next step — a way to attract users, increase adoption, and make digital dollars competitive with bank accounts. To the banking sector, however, those same rewards signal something far more disruptive.
During discussions connected to the proposed Digital Asset Market Clarity Act, banking representatives reportedly arrived with a written proposal that surprised many in the room. Rather than negotiating limits or guardrails, they pushed for a sweeping prohibition on stablecoin rewards altogether. The proposed language would prevent any financial incentive tied to holding or using a payment stablecoin.
Crypto executives entered the meeting expecting compromise. Bankers entered with a line in the sand.
The banks’ concerns are not theoretical. Traditional institutions depend heavily on deposits. Those deposits are the raw material banks use to issue mortgages, fund small-business loans, and support local economies. If stablecoins begin offering competitive rewards, banks fear customers may gradually move money out of savings accounts and into digital wallets.
From the banking perspective, the issue is not about resisting innovation — it is about protecting the stability of a system built on predictable funding. Several industry groups have urged regulators to closely study how stablecoins could affect deposit flows before allowing reward programs to grow unchecked.
Publicly, many leaders in the crypto sector described the meeting as constructive. That response was hardly surprising. In Washington, progress is often measured in tone as much as results.
But people familiar with the discussions painted a far less optimistic picture. Behind the closed doors, positions barely shifted. This was already the second White House meeting focused on the topic, and the divide between banks and crypto firms remains wide.
For the crypto industry, abandoning yield is not a minor concession. It would fundamentally alter how many platforms compete, attract users, and justify their existence in a crowded digital finance landscape.
For banks, allowing stablecoin rewards to expand unchecked could slowly erode the foundation of traditional lending.
The meeting ended without agreement, but it made one thing clear: the battle over stablecoins is no longer just about technology.
It is about who will shape the next era of money — and who might lose control when it arrives.
