Stablecoin Showdown: Crypto vs. Banks in the U. S. Senate

The U.S. Senate is currently in a heated debate over stablecoins, with crypto groups and big banks locked in a disagreement about whether users should receive rewards for holding stablecoins.

The Divide

• Crypto Side (Digital Chamber): Supports rewards for users who hold stablecoins.
• Banks: Oppose rewards, fearing they could undermine traditional banking. They have even published a paper outlining their concerns.

Proposed Compromises

The crypto group has countered with their own set of rules, proposing to:

• Remove rewards for simply holding stablecoins.
• Retain rewards for active users who help with transactions or provide liquidity.

The Banks' Stance

Banks are pushing for a two-year study on stablecoins but are unwilling to budge on their opposition to rewards. Meanwhile, the crypto group is open to the study as long as it doesn’t immediately lead to new regulations.

White House Intervention

The White House is urging both sides to find a compromise by the end of the month. However, the banks remain firm in their position. The crypto group hopes their revised proposal can restart negotiations, as they include members from both industries.

Key Points of Contention

The crypto group emphasizes the importance of protecting two types of rewards:

1. Rewards for providing liquidity.
2. Rewards for participating in the ecosystem.

These are crucial for decentralized finance (DeFi), they argue.

Next Steps

Another meeting may take place next week, with a Trump administration crypto adviser hoping for a breakthrough. However, it remains uncertain whether the banks will soften their stance.