White House sets February deadline to settle $6.6 trillion fight between Coinbase and banks
The showdown in plain English
The White House quietly gave banks and crypto platforms a calendar: sort out the stablecoin “rewards” argument by the end of February or watch a much bigger digital-asset bill sputter. This isn’t a tiny policy tweak — it’s a clash over whether digital dollars can start acting like bank deposits, and that scares a lot of people with balance sheets to protect.
At the center: stablecoins earn yield on the short-term assets that back them (think Treasuries and cash-like instruments). Lawmakers deliberately barred issuers from paying interest directly to holders so payment tokens wouldn’t morph into savings accounts. Banks say allowing exchanges or affiliates to hand out yield-ish perks would sidestep that rule and turn payment tools into deposit substitutes. Crypto firms push back, saying third-party platforms should be allowed to design lawful incentives tied to usage, not time-based savings.
What’s at stake and what could happen next
Put simply: either the parties strike a deal (and the market-structure bill moves forward in a much-changed form) or lawmakers don’t, and Congress likely punts for the year while regulators fill the vacuum. The numbers fueling the drama are big — stablecoins are hundreds of billions of dollars in circulation and some bank studies sketch worst-case deposit outflows into the trillions under extreme assumptions. Those are stress-test scenarios meant to get attention, but they explain why banks are shouting.
Three compromise routes are being whispered about in the halls of power: 1) an “activity-based rewards” safe harbor that bans pay-for-just-holding but allows rebates and perks tied to transactions or loyalty behavior; 2) a requirement that stablecoin reserves live at community banks so the business turns into a deposit-distribution channel rather than a pure substitute; or 3) different rules for retail users versus institutions, allowing wholesale settlement incentives while clamping down on consumer-facing yield offers. Each path reshapes product design: expect marketing to pivot from “park and earn” to “use and get rebates” if the first option wins.
If negotiators fail to agree, the likely outcome is messy: the comprehensive bill stalls, and policy arrives piecemeal through agencies, enforcement actions, and a patchwork of rules across jurisdictions. Meanwhile, other countries are moving on licensing and frameworks, so U.S. indecision will influence where companies build their next big products.
Whatever the result, this fight is a reminder that “crypto” is not a single interest bloc — it’s a messy lineup of businesses with clashing incentives. The stablecoin yield debate will set a template for future fights over DeFi, custody, and payments: legislation will be about bargaining, not blissful hands-off tech love. The deadline is Feb. 28. If you like drama, mark your calendar; if you like clarity, well… hope the negotiators do their homework.