White House to Host Banking-Crypto Summit to Restart Progress on Crypto Bill

The White House’s crypto council plans to host a summit for executives from trade groups representing the banking and cryptocurrency industries in an effort to restart progress that was being made on crypto legislation, Reuters reported Wednesday (Jan. 28).

The meeting will focus on a key issue that caused the movement of the legislation to stall: the bill’s provisions having to do with interest and other rewards crypto companies can offer on customer holdings of stablecoins, according to the report.

PYMNTS reported earlier in the month that the Senate Banking Committee had scheduled a markup of the crypto bill on Jan. 15 but postponed that meeting on Jan. 14 after crypto exchange Coinbase withdrew its support for the draft.

Coinbase CEO Brian Armstrong said at the time that his objections to the bill included draft amendments that would eliminate rewards on stablecoins.

PYMNTS reported on Jan. 15 that the friction around the crypto bill reflected long-running tensions between the crypto sector and the traditional banking industry.

Banks were increasingly lobbying against crypto offerings that resemble deposit products, especially stablecoin rewards that, in their view, compete against regulated interest accounts.

This banking pushback seeped into the legislative text, prompting provisions aimed at limiting crypto incentives, which were a key flashpoint for Coinbase and other developers of stablecoin-based products.

It was reported Monday (Jan. 26) that Benchmark analyst Mark Palmer said the delay in passing crypto market structure legislation is capping the valuation expansions of crypto companies exposed to the U.S. market.

Palmer said that he believes it is more likely than not that a crypto market structure bill will be passed, though it could be altered from its current form, and that the passage of any form of legislation would reduce regulatory risk and encourage broader institutional participation.

It was reported Tuesday (Jan. 27) that investment bank Standard Chartered said the rise of stablecoins could pose a grave threat to America’s regional banks.

The firm said the chief risk for banks is the deterioration of net interest margin (NIM), a key metric of profitability for banks, as NIM is driven by the deposits being pulled into digital assets.