Summary
White House negotiators signaled a potential breakthrough in the stablecoin rewards debate during the third round of closed-door CLARITY Act negotiations with banking and crypto industry representatives. The administration's position now supports some form of stablecoin rewards remaining in the next draft — a shift from earlier uncertainty. Banking representatives, who had pushed for a full ban on stablecoin rewards, are now working on revised language allowing limited rewards tied to specific transactions while preventing programs resembling interest payments for simply holding stablecoins.
Key Facts
- Third round of CLARITY Act negotiations; White House crypto adviser Patrick Witt leading
- Banks previously pushed for full ban on stablecoin rewards (fearing deposit outflows)
- Compromise: limited rewards tied to specific transactions/activities, not interest-like payments for holding
- CLARITY Act missed July 4 target; faces August 7 deadline before Senate August break
- Would reshape existing GENIUS Act stablecoin law passed last year
- Other issues unresolved: Democratic lawmakers pushing for stronger DeFi protections and oversight
- If banking groups sign off, revised language strengthens bill's chances in Senate
Why It Matters
The stablecoin rewards debate is one of the biggest sticking points in US crypto legislation. Banks fear that yield-bearing stablecoins could pull deposits away from traditional banking, weakening their core lending model. The White House's backing of limited rewards is cautiously positive for stablecoin issuers, but the outcome depends on how far banks are willing to go in accepting the compromise. With the August 7 deadline approaching, this could determine whether the CLARITY Act passes this session.