White House Takes Charge in Stablecoin Yield Debate

Highlights:

• The White House refocuses stablecoin yield discussions to reward activities, not idle balances.
• Banking groups worry more about competition than deposit flight due to stablecoin rewards.
• The March 1 deadline pushes both the crypto and banking sectors to reach a stablecoin yield agreement.

The White House has intervened to drive discussions on stablecoin yield, a key concern for the broader crypto market structure bill. This represented a shift from the past, as the debate was dominated by crypto companies and banks, according to journalist Eleanor Terrett.

On Feb 19, the White House convened a closed-door meeting that included industry representatives from both crypto companies and banks. Major players such as Coinbase, Ripple, and Andreessen Horowitz (A16z) were in attendance. Meanwhile, the banks were represented by trade associations like the American Bankers Association and the Bank Policy Institute.

The point of concern: The regulation of the stablecoin yield, or rewards. A draft by the White House Crypto Council, headed by Patrick Witt, aimed to narrow the scope of these rewards. The draft aimed at having only certain types of rewards at hand, but not a blanket yield to idleness of stablecoin balances.

🚨NEW: Per sources in the room, today’s stablecoin meeting was smaller than last week and included reps from @coinbase, @Ripple, @a16z, plus trade groups @BlockchainAssn and @crypto_council. No individual bank reps attended — bank voices were represented via trade associations…

— Eleanor Terrett (@EleanorTerrett) February 20, 2026

The Debate Over Stablecoin Yield

The treatment of the stablecoin rewards has been one of the major points of contention in these debates. Crypto companies have advocated for more flexibility, hoping to provide yield on idle holdings. This has, however, caused alarm among banks, which fear such rewards may drain deposits in the traditional financial institutions.

The White House has shifted toward a compromise that would allow rewards on the basis of transaction activity and not idle balances. Such a shift would restrict the type of rewards that crypto companies would be able to provide, particularly for holding stablecoins without any active engagement.

Banks and Crypto Firms Lock Horns Over Stablecoin Rewards

Banks have raised alarm over the competition that stablecoin yield might bring to their operations. Previously, the main worry was regarding the deposit flight, but today, industry insiders opine that the real issue is the competition between crypto and traditional financial institutions.

On their part, crypto companies claim that limiting rewards would suppress innovation and weaken the competitiveness of stablecoins. They also caution that this might drive innovation abroad, where the regulations are much more friendly.

Both parties expressed optimism even after these tensions in the meeting. Coinbase and Ripple leaders referred to the talks as being productive and cooperative, hinting that some progress was made. However, the question of the stablecoin yield is not finalized yet, and additional discussions are anticipated.

More progress today with @patrickjwitt at the WH. The dialogue was constructive and the tone cooperative. More to come. https://t.co/Xntj2PdO16

— paulgrewal.eth (@iampaulgrewal) February 19, 2026

Enforcement and Penalties on Stablecoin Rewards

The most recent proposal suggests severe penalties against companies violating regulations regarding stablecoin rewards. Civil fines may be as high as $500,000 per violation, per day. Furthermore, the SEC, CFTC, and the U.S. Department of the Treasury would share enforcement authority.

This anti-evasion language has been introduced so that companies cannot avoid the new regulations on stablecoin yield, particularly in relation to idle balances. Such actions indicate the seriousness with which the White House is taking this issue.

A deadline of March 1 is approaching, and both sides are under pressure to find a middle ground. Meanwhile, Ripple CEO Brad Garlinghouse noted in a recent interview that the involvement of the White House gives him an optimistic edge that the legislation will be passed by the end of April. He projected an 80-90% probability of success.