Stablecoin provisions at the heart of crypto legislation are moving forward after the White House’s latest round of talks with banking and crypto executives.
Even as differences narrow, the bill could still face further challenges before reaching the president's desk for signature.
Industry groups described the discussions as constructive and moving toward a workable framework. Coinbase CEO Brian Armstrong told CNBC that "there’s now a path forward where we can get a win-win-win outcome."
It was the third meeting between administration officials, banks and crypto advocates as lawmakers seek to resolve disputes that have stalled progress on the legislation.
For banks, the priority has been clear: stablecoins should not operate like interest-bearing deposit accounts outside the regulated banking system.
For crypto firms, the concern is more specific. They are signalling a willingness to accept limits on passive yield but are pushing to ensure the legislation does not unintentionally restrict how stablecoins function inside trading and liquidity infrastructure.
A 13 Feb policy paper from The Digital Chamber, a pro-crypto lobby group, acknowledges that Section 404 of the Senate Banking Committee’s draft would prohibit paying interest or rewards "for merely holding payment stablecoins."
Section 404 is the portion of the market structure bill designed to draw a line between payment stablecoins and traditional bank deposits.
The Digital Chamber, which represents more than 250 members across traditional and crypto-native companies, does not argue against that prohibition. Instead, it urges lawmakers to retain certain exemptions within the same section to avoid disruption in mechanism that allow stablecoins to serve as the base layer for trading and settlement in crypto markets.
"...the legislation could significantly impair U.S. dollar denominated stablecoins currently deployed in Decentralized Finance ("DeFi") protocols and as Liquidity Provider (“LP”) pairs on DeFi exchanges, which pay users in exchange for facilitating liquidity," reads the letter.
The White House is seeking to finalize the deal by the end of next week, a tight deadline for the parties to reach a compromise. But Democrats imply that the bill will face a separate challenge tied to conflicts of interest.
On 19 Feb, a group of lawmakers sent a letter to Treasury Secretary Scott Bessent questioning the review of World Liberty Financial’s reported application for a banking licence.
World Liberty Financial is a crypto venture backed by members of the Trump family. The company has its own stablecoin, USD1, which is promoted as 'The Dollar. Upgraded.' In an interview with CNBC during its Mar-a-Lago event on 18 Feb, Donald Trump Jr. pitched the stablecoin as a vehicle "to preserve dollar hegemony."
For House Democrats, the debate is no longer about crypto chartering but whether the bank-chartering process is resilient to political and geopolitical pressure.
"That convergence of facts raises questions regulators cannot afford to sidestep," notes the letter.
Speaking at the ETHDenver industry conference on 20 Feb, Patrick Witt, executive director of the President’s Council of Advisors for Digital Assets, compared the market structure legislation to the landmark financial reform law enacted after the 2008 crisis.
"One of the challenges with a piece of legislation like this is just the sheer scope. A lot of folks are talking about it as the biggest piece of financial reform since Dodd-Frank," Witt said.
