Banks and Crypto Backers Tussle as Senators Eye Landmark Digital Asset Bill
(Bloomberg) — Banking groups are making last-minute changes to agree on a stablecoin yield as a key Senate panel begins considering a landmark digital asset bill.
The proposed changes would replace the compromise brokered by Sen. Thom Tillis, a Republican, and Angela Alsobrooks, a Democrat, on stablecoin rewards earlier this month in hopes of advancing legislation the crypto industry has long sought to establish clear rules for the digital asset space.
A number of banking advocacy groups, including the American Banking Association and the Consumer Bankers Association, published text on Friday that would completely limit stablecoin issuers from granting any rewards to the asset. Under the terms of the settlement, companies can provide rewards when a customer actively uses the stablecoin. The crypto lobby initially hoped that they would be able to distribute rewards to customers for holding the stablecoin in an account.
In a letter accompanying the proposed text, the group of six bank lobbying groups wrote that the language proposed by senators “contains exceptions that would circumvent the intended ban and encourage customers to hold and grow stablecoin balances at the expense of deposits.”
The crypto industry initially hoped to pass the legislation last summer with the approval of President Donald Trump but faced obstacles from the banking lobby. The Senate Banking Committee’s decision to schedule a price increase for next week suggests new momentum.
Crypto advocates immediately jumped on the banking group’s proposed language, calling the industry “anti-competitive.” The yield of stablecoins has been one of the key sticking points in negotiations to finally pass legislation that would create clear regulation for digital assets.
Paul Grewal, Coinbase’s chief legal officer, wrote that the language proposed in X was not a “narrow solution” and was instead designed by the banking lobby to “kill competition.”
“For months, their goal was to provide returns ‘equivalent’ to interest-bearing bank accounts. Now there are transaction-based rewards, loyalty incentives, and other consumer benefits tied to blockchains,” Grewal wrote. “That’s enough.”
A spokesman for Alsobrooks told Bloomberg they disagreed with the banking lobby’s stance on the proposed yield language in the bill, citing a statement both senators made earlier in the week. Tillis’ office and Senate Banking Chairman Tim Scott’s office did not respond to requests for comment.
“Our settlement also allows crypto companies to offer other types of customer rewards,” Alsobrooks and Tillis said in the statement. “Most importantly, it helps put us on a bipartisan path to pass the CLARITY Act by providing the regulatory certainty needed to spur innovation. Some in the banking industry may not want either of those things to happen, and we respectfully agree to disagree.”
–With help from Lydia Beyoud.
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