Key Takeaways:

• White House talks between crypto firms and banking groups failed to resolve stablecoin yield disputes.
• The CLARITY Act, aimed at splitting oversight between the SEC and CFTC, remains stalled in the Senate.
• Banks warn stablecoin rewards risk deposit outflows, while lawmakers flag ethics and conflict-of-interest concerns.

High-stakes White House negotiations have failed to resolve disagreements blocking US cryptocurrency regulation, extending a legislative stalemate that has persisted for months.

On Monday, 2 February 2026, cryptocurrency firms and banking groups met for over two hours at the White House to discuss the Digital Asset Market Clarity Act, but ended without agreement on stablecoin yield – whether crypto platforms can offer rewards or interest to customers holding stablecoins, or not.

This issue has emerged as the main roadblock, overshadowing other topics like asset custody or trading disclosures, due to banks’ fears of losing billions of dollars in customer deposits to crypto. Yield here mainly means pass-through earnings from reserves invested in safe assets like Treasury bonds, not direct lending or promotional perks.

Patrick Witt, President Donald Trump’s digital assets adviser, led the session and described it as constructive, expressing optimism for a quick resolution. However, banking representatives offered no concessions, potentially requiring member institution approval before agreeing to compromises.

What the bill aims to achieve

The CLARITY Act aims to establish clear regulatory rules that could benefit everyday crypto users in the US by providing safer trading platforms, better risk disclosures, and stronger protections against fraud. The legislation would divide oversight between the Securities and Exchange Commission (SEC), which handles securities, and the Commodity Futures Trading Commission (CFTC), which oversees commodities.

The bill passed the House of Representatives in July 2025, and the Senate Agriculture Committee cleared its version on 29 January 2026 in a 12-11 party-line vote. It now awaits action in the Senate Banking Committee, where debates over contentious provisions have stalled progress.

February-end deadline for compromise

The White House directed participants to finalize compromise language on stablecoin yields before the end of February 2026.

Cryptocurrency participants in the 2 February crypto meeting included executives from Coinbase, Circle, Ripple, and Crypto.com, plus officials from the Blockchain Association and Crypto Council for Innovation. Banking groups, outnumbered by crypto representatives, included participants from the American Bankers Association, the Bank Policy Institute, and Independent Community Banks of America.

Cody Carbone of the Digital Chamber called the meeting ‘exactly the progress needed.’ 

Summer Mersinger of the Blockchain Association praised the administration’s leadership in bringing stakeholders together. 

While banking groups affirmed their commitment to policies supporting economic growth, they emphasized legislation supporting local lending while protecting financial system safety.

Deposit fears, ethics concerns deepen crypto regulation divide

Traditional financial institutions argue that platform-provided yield on stablecoins would pull deposits from conventional accounts, potentially weakening community banks and local lending to families and small businesses. Standard Chartered estimates banks could lose around $500 billion in deposits by 2028 if stablecoin markets grow significantly.

Cryptocurrency firms maintain that banks are suppressing competition under the guise of stability concerns. The GENIUS Act, passed on 18 July 2025, already prohibits stablecoin issuers from directly paying interest. The dispute concerns whether third-party platforms like exchanges can offer rewards, something existing law permits but banks want restricted.

Beyond stablecoin rewards, which center on technical market structure provisions like platform incentives and deposit impacts, Democrats raised concerns about ethics requirements restricting officials from holding cryptocurrency business interests, bipartisan CFTC staffing, and anti-money laundering safeguards.

These non-technical ethics demands gained urgency following reports of a $500 million UAE investment in Trump-linked World Liberty Financial, heightening conflict-of-interest concerns.

Monday’s discussions took place on the third day of a partial government shutdown over congressional funding disputes. The White House has scheduled narrower follow-up meetings to break the impasse before the month’s end.