A critical timeline has been set in the negotiations under the Senate-backed Digital Asset Market Clarity Act, which aims to provide a clear framework for cryptocurrency markets in the US. It is reported that the White House wants the disagreement regarding stablecoin reward programs resolved by March 1st, and that failure to reach an agreement by this date could stall the process.
Clear message from the White House: No complete ban
In a closed session held on Thursday, where the parties met for the third time, White House representatives clarified their position. Accordingly, limited stablecoin rewards tied to specific transactions and activities will be allowed; however, interest-like returns based solely on holding stablecoins, resembling deposit accounts, will be prohibited. According to sources who attended the meeting, this approach increased pressure on banks to reach a compromise. Banking representatives, who previously advocated for a complete ban on stablecoin rewards, have now begun working on a new regulatory language that will allow for limited rewards.
Banks' concern: Will the deposit base weaken?
The issue is quite critical for the banking sector. Reward programs offered by stablecoin issuers could provide an alternative to interest-bearing deposit accounts in traditional banks. This could directly impact banks' lending capacity and core revenue model.
Banks believe that customers shifting their funds to stablecoin platforms could erode their deposit base. Therefore, they initially demanded a complete ban. However, it is stated that in the last meeting, a formula was considered that would differentiate deposit-like returns with limited and transaction-based rewards.
Article 404 at the heart of the discussion
The stablecoin section of the bill, particularly Article 404, has become the most critical breaking point of the regulation. Interestingly, this section is not directly related to the market structure. Nevertheless, the fate of the bill seems largely dependent on this heading.
Furthermore, the changes being worked on could effectively reshape the GENIUS Act, which came into effect last year and defines the stablecoin framework. While the current law allows crypto platforms more room for reward programs, the new proposal narrows this area but does not eliminate it entirely. The White House wants to speed up the process.
The meeting was led by President Donald Trump's crypto advisor, Patrick Witt, on behalf of the White House. Witt and his team urged the parties to move quickly. The goal is to unlock the stablecoin issue and allow broader market structure regulation to move forward in the Senate.
The White House is expected to prepare an updated draft text and send it to the banks. The final language will be clarified after the banks review this text and provide feedback. Democrats' demands may complicate the process.
Although progress has been made on stablecoin rewards, other issues in the bill are still controversial. Democratic senators are demanding stronger investor protections, especially in the decentralized finance (DeFi) sector. There are also politically charged provisions such as prohibiting high-ranking public officials from directly taking roles in the crypto sector and ensuring full appointments to regulatory bodies. These issues have not yet been resolved. Therefore, although the agreement on stablecoin rewards speeds up the process, bipartisan support seems essential for the bill to receive final approval.
