This article was first published on Deythere.
- Why Stablecoin Yields Are a Point for Discussion
- White House Meetings and Legislation Stalls
- Tension Between GENIUS Act And Yield Rules
- What Banks and Crypto Want
- A Crossroad for Dollar-Denominated Digital Tokens
- Conclusion
- Glossary
- Frequently Asked Questions About Stablecoin Yield
- Why are banks are against stablecoin yield?
- What is the CLARITY Act?
- What do crypto companies desire in stablecoin regulations?
- Is there a deadline for an agreement?
- References
The clash over whether stablecoins should be permitted to offer yield or rewards is now one of the most talked about policy battles in the U.S. crypto industry this year.
Top bank bosses and crypto firm executives have met with inside the White House in Washington more than once to hash out their differences over how digital money should be regulated under the CLARITY Act.
Though some say the dialogue has been productive so far, lack of resolution on its major concern which is the stablecoin yield, progress on the important legislation has stalled so far.
Stablecoins now make up a big share of the digital currency market, with a total supply exceeding $300 billion, based on DeFiLlama data.
Why Stablecoin Yields Are a Point for Discussion
The stablecoin yield issue is no longer about whether tokens pegged to the dollar should exist, it is whether, and how, interest or rewards on holding them should fall under the law.
Banks view stablecoins as a direct threat to traditional deposit accounts particularly if they can offer returns that resemble interest. Regulators and banking executives have worried that giving incentives to holders of stablecoins could lead depositors to pull money out of banks, reducing lending capacity which is a critical source of funding for households and small businesses.
In congressional talks, banking organizations sketched out a broad principle: no entity should provide “any form of financial or non-financial consideration” to the holder of a stablecoin linked to payment for purchase, custody or maintenance of such a payment stablecoin.
This language suggests that banks wish to ban both interest-like yield and token rewards that resemble it. Crypto companies however argue that rewards aid adoption and innovation, and banning them would diminish the competitiveness of U.S. stablecoins on a global basis.
White House Meetings and Legislation Stalls
Two White House discussions held in February 2026 had high officials from both banking and crypto sectors. The second meeting, which participants from both sides characterized as constructive and focused, still failed to reach an agreement on stablecoin yield rules.
Banks advocated for tight caps or outright bans on stablecoin yield, while crypto firms lobbied for more expansive permissible activities that can range from rewards tied to use or ecosystem activity.
The discussions were scaled-down and more narrowly focused than previous rounds. High-level bank executives from Goldman Sachs, JPMorgan, Bank of America, Wells Fargo, Citi, PNC and U.S. Bank joined trade groups like the American Bankers Association and Bank Policy Institute.
The crypto side included major industry figures from Coinbase, a16z, Ripple, Paxos, the Blockchain Association and the President’s Crypto Council.
The White House reportedly told the groups to reach a deal by March 1, 2026, or risk the crypto market structure bill stalling further.
Tension Between GENIUS Act And Yield Rules
The GENIUS Act was signed into law in July 2025, seeking to regulate stablecoins under authority tied to reserve requirements and U.S. Treasury backing.
Although the GENIUS Act already prescribes how stablecoins should be issued and backed, it doesn’t address whether holders can earn rewards. Banks are worried that third parties like exchanges and fintech firms might also use incentives designed to resemble interest, diverting deposit-like money from banks even if tokens are not technically denominated deposit accounts.
Crypto companies say that stablecoin yields are necessary in order to create a competitive digital dollar ecosystem, and an overly suffocating set of rules would hand dominance to established financial players.
Coinbase CEO Brian Armstrong has previously stated the company could not support the CLARITY Act in its current form due to the stablecoin yield restriction, an argument that led to a slowing of the legislative process.
With the Senate Banking Committee having grounded the CLARITY Act, lawmakers and industry insiders are now waiting for a potential regulatory compromise in the weeks ahead.
What Banks and Crypto Want
Mainstream banks want to see a ban on stablecoin yields. They say that high returns would erode loyalty of depositors; encourage capital flight from bank balance sheets; and reduce the availability of credit for local lending.
Some in the industry have speculated that hundreds of billions in deposits could be at risk if stablecoin holders are able to earn competitive returns.
Crypto firms on the other hand are seeking clarity and flexibility. They are pushing for “permissible activities”, defined functions under which stablecoin returns contingent on actual use cases like transaction rebates, loyalty points or spending rewards would not count as deposit-like interest.
They say the lack of such incentives would force U.S. stablecoin offerings to fall behind global competitors and limit consumer choice.
A Crossroad for Dollar-Denominated Digital Tokens
As it stands in February 2026, this lingering issue has become the center of conversations about where digital dollars belong within the financial system.
If banks secure a ban on rewards, stablecoins could end up only growing as payment and settlement technologies. If crypto firms are able to maintain best-practice mechanics, digital assets might grow into consumer-facing money alternatives with yield-like characteristics and succeed in changing what “cash” means altogether.
The choice of whether or not to allow stablecoins to pay yield, or provide rewards and where Americans will want to hold their dollar balances, what sort of financial products own digital rails, and which sort of organizations actually wield influence in a world of programmable money, may all be affected by the decision.
That new deadline is now looming as a very important marker on whether compromise will emerge or the stand-off will continue.
Conclusion
U.S. policymakers, banks and crypto firms still have very different visions for how stablecoins should function, particularly when it comes to yield and rewards. White House meetings in the last days have been described as more focused than but not yet culminating in a resolution.
Banks are pushing for regulation that protects their deposit franchises, while crypto firms are pushing for incentives to support user adoption.
The CLARITY Act is stuck and a March deadline is fast-approaching; stablecoin yield has now risen as one of the signature policy debates for digital currency in 2026.
Glossary
Stablecoin: A digital currency that is pegged to a fiat currency, like the U.S. dollar.
Yield: The return a person receives on an investment or asset, typically in the form of interest or rewards.
CLARITY Act: U.S. legislation seeking to properly define the crypto market and regulate digital assets and stablecoins.
GENIUS Act: The 2025 U.S. law that imposed regulatory standards for payment stablecoin issuance and supervision.
Payment stablecoin: A type of stablecoin that is meant for payments and settlements as opposed to investment.
Frequently Asked Questions About Stablecoin Yield
Why are banks are against stablecoin yield?
Banks contend that yield-paying stablecoins could siphon off deposits from regular banks, weakening their funding base and their ability to make loans to households and small businesses.
What is the CLARITY Act?
The CLARITY Act is an anticipated U.S. crypto market structure legislation that features coverage for digital assets, such as stablecoin regulation, and will provide the necessary clarity on what constitutes a security and what does not. Discussions about the language for its stablecoin yield provisions are hung up over disputes between banks and cryptocurrency companies.
What do crypto companies desire in stablecoin regulations?
Crypto firms seeking to innovate want the ability to offer rewards that are linked to usage like transaction incentives or loyalty benefits and argue that overly stringent yield bans would stifle competition and innovation.
Is there a deadline for an agreement?
The White House has encouraged an agreement on the stablecoin yield by March 1, 2026, to prevent the crypto bill from stalling further.
References
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