The White House is implementing stringent regulations designed to prohibit the offering of yield on payment stablecoins.

Proposed enforcement measures include civil fines of $500,000 for each violation, targeting firms that attempt to create products similar to yield farming using stablecoin balances.

Proposal Details

Details from the administration’s ongoing dialogues with crypto industry leaders and bank representatives were shared by journalist Eleanor Terrett via social media. She indicated that this meeting was smaller than the previous one and included representatives from Coinbase, Ripple, and Andreessen Horowitz (a16z), alongside trade groups like the Blockchain Association and the Crypto Council. Notably, no direct bank representatives were present, as the sector was represented only through trade associations.

During the discussions, Patrick Witt, Executive Director of the White House Crypto Council, presented draft regulations that are currently under review. They addressed concerns raised by financial institutions about yield on stablecoins while clarifying that restrictions would be narrow.

Currently, the guidance suggests that generating yield from idle stablecoin balances is off the table, leading to discussions about potential rewards linked to specific user activities.

One attendee mentioned that bank concerns seem more influenced by competitive pressures than actual deposit risks. Additionally, some sources indicated that trade groups still advocate for a study on deposit outflows to evaluate how the expansion of payment stablecoins may impact banking transactions.

Ongoing Discussions

Sources noted that the latest meeting was described as “productive” and “constructive,” with the White House steering the conversation rather than allowing crypto firms to dominate. This follows two prior meetings that discussed permitting digital assets to provide yield, implications for bank deposits, and broader competitiveness and innovation concerns. Banking trade groups are now set to update their members on the latest developments and explore potential compromises on stablecoin rewards. Some insiders believe that a resolution could be realistic by the end of the month, with ongoing negotiations expected soon.