A long-running dispute over stablecoin yield payments has moved closer to resolution in Washington. Senator Thom Tillis of North Carolina, Senator Angela Alsobrooks of Maryland, and the White House have reached a preliminary understanding centered on blocking yield payments on passive stablecoin balances. The deal could reopen momentum for broader digital asset legislation, especially the CLARITY Act, which had stalled as banks and crypto advocates clashed over key provisions.
The core fight centers on passive stablecoin balances
The main disagreement has been whether stablecoin issuers or related platforms should be allowed to pay yield on funds sitting passively in user accounts. Banking groups have argued that such rewards could encourage customers to shift deposits out of traditional banks and into stablecoin-based products. That fear of deposit flight has shaped regulatory talks since the start of the year. It also became a major source of delay in Congress.
Alsobrooks said the new framework is meant to support innovation while addressing concerns raised by financial institutions. Under the proposed language, lawmakers aim to stop yield payments on passive holdings in order to reduce the risk of large-scale deposit withdrawals. The full text has not been released. Lawmakers are still refining the language before circulating it more broadly across crypto and banking stakeholders.
White House backs the deal as CLARITY Act talks resume
Tillis described the process in cautious terms and said White House involvement was important in narrowing partisan differences. He added that a preliminary consensus is now in place, but industry review remains necessary before any final legislative package can move ahead.
The White House has also publicly endorsed the breakthrough. Patrick Witt, a senior adviser for crypto policy at the White House, called the agreement an important step toward comprehensive digital asset legislation, while noting that unresolved issues still stand in the way of a final law. The CLARITY Act would set clearer rules for stablecoin issuers and address related tensions involving banks and digital asset platforms, but its path still depends on additional negotiations.
Industry feedback now becomes the next test
In the coming weeks, senators and administration officials are expected to continue talks with representatives from both the banking and crypto sectors to refine the bill. Support from both camps is needed for the legislation to advance through the Senate Banking Committee and eventually reach a vote. A breakthrough has been reached, but the pace of progress will depend on how much backing the final language receives.