Introduction to the Crypto Legislation Clash
The White House is set to meet with executives from the banking and cryptocurrency industries to discuss a path forward for landmark crypto legislation, which has stalled due to a clash between the two powerful sectors, according to three people familiar with the matter. The summit, hosted by the White House’s crypto council, will include executives from several trade groups and will focus on how the bill treats interest and other rewards crypto firms can dish out on customer holdings of dollar-pegged tokens known as stablecoins.
Background on the Legislation
The legislation, which was delayed earlier this month, has hit resistance over how it proposes regulating stablecoin rewards — particularly provisions that could limit interest-bearing or reward-linked features tied to the dollar-pegged tokens. Banks have opposed letting stablecoin issuers or their exchange partners offer rewards, warning it risks deposit flight. The crypto industry has said offering these rewards will benefit end users.
The Clash Between Banks and Crypto Companies
At the heart of the battle being waged by some of Washington’s most powerful lobbies is control over several trillions of dollars in banking deposits and a debate over whether crypto companies can offer an alternative place to stash cash. The crypto industry has long had a complicated and adversarial relationship with traditional banks, a distrust dating back to the birth of the crypto movement in the wake of the 2008 financial crisis.
Expert Insights and Analysis
According to sources, the White House meeting could help the industries, which have been fighting head-to-head over the bill, reach a compromise, and underscores how keen President Donald Trump’s administration is to get the legislation across the line. Trump courted crypto cash on the campaign trail, promising to promote the adoption of crypto assets. The Senate Banking Committee was scheduled earlier this month to debate and vote on the bill, but the meeting was postponed at the last minute, in part due to concerns among lawmakers and both industries over the interest issue.
Practical Takeaways and Future Implications
The meeting is being convened by the White House’s internal crypto policy council, a group that includes officials from the National Economic Council, Treasury, and other agencies. The goal is to gather feedback directly from market participants on how to resolve sticking points in the bill. The legislation would also grant the crypto industry regulatory wins, such as classifying stablecoins as an asset rather than a security. Doing so would shield the currencies from scrutiny by the Securities and Exchange Commission and instead place them under the purview of the far smaller and more industry-friendly Commodity Futures Trading Commission.
