Exclusive-White House set to meet with banks, crypto companies on legislation clash

By Hannah Lang

Jan 28 (Reuters) – The White House on Monday will meet with executives from the banking and cryptocurrency industries to discuss a path forward for landmark crypto legislation which has stalled due to a clash between the two powerful sectors, said three people familiar with the matter. 

The summit hosted by the White House’s crypto council will include executives from several trade groups and will focus on how the bill treats interest and other rewards crypto firms can dish out on customer holdings of dollar-pegged tokens known as stablecoins, the people said. 

The White House meeting could help the industries reach a compromise, and underscores how keen President Donald Trump’s administration is to get the legislation across the line.

The White House did not immediately respond to a request for comment. The sources declined to be identified discussing private policy discussions. 

The Senate has for months been working on the bill, dubbed the Clarity Act, which aims to create federal rules for digital assets, the culmination of years of lobbying by the crypto industry. Crypto companies have long argued that existing rules are inadequate for digital assets, and that legislation is essential for companies to continue to operate with legal certainty in the U.S. 

The House of Representatives passed its version of the bill in July. 

The Senate Banking Committee was scheduled earlier this month to debate and vote on the bill, but the meeting was postponed at the last minute, in part due to concerns among lawmakers and both industries over the interest issue.

Crypto companies say providing rewards such as interest is crucial for recruiting new customers and that barring them from doing so would be anti-competitive. Banks say the increased competition could result in insured lenders experiencing an exodus of deposits — the primary source of funding for ⁠most banks — potentially threatening ⁠financial stability. 

A report from Standard Chartered on Tuesday estimated that stablecoins could pull around $500 billion in deposits out of U.S. banks by the end of 2028. 

The provision at issue stems from a law passed last year which created a federal regulatory framework for stablecoins, potentially paving the way for greater general use of the dollar-pegged tokens. Stablecoins can be used to send and receive payments instantly, although they are most often used ‍for trade in and out of other crypto tokens, such as bitcoin.

That bill prohibited stablecoin issuers from paying interest ‌on ‌cryptocurrencies, but banks say it left open a loophole that would allow for third parties – such as crypto exchanges – to pay yield on tokens, creating new competition for deposits.

(Reporting by Hannah Lang in New York; Editing by Chizu Nomiyama )