WASHINGTON: President Donald Trump has sided with cryptocurrency companies in a growing fight with U.S. banks over whether holders of dollar-pegged stablecoins should be allowed to earn yield or rewards, a dispute that has become a major obstacle for sweeping digital-asset legislation in Congress. Trump criticized banks for opposing stablecoin yield and urged lawmakers to advance the CLARITY Act, a market-structure bill that would set clearer federal rules for parts of the crypto industry, including stablecoins.
The clash centers on products that function like interest-bearing cash equivalents, with stablecoin issuers and trading platforms seeking the ability to offer returns to customers while banks and banking trade groups argue that paying yield would turn stablecoins into direct competitors to insured deposits. Banks have warned that deposit outflows could affect traditional funding models, while crypto companies say consumers should be able to earn returns through digital dollar products offered on regulated terms.
Negotiations over the CLARITY Act have repeatedly stalled over how to treat yield and rewards, according to people familiar with the talks and public statements from the parties involved. The White House recently floated a compromise that would permit limited rewards structures, but major banking interests rejected the proposal. Some crypto firms signaled they could accept a narrower approach, but the gap with banks has remained wide as lawmakers weigh how to define and enforce any limits.
Stablecoin yield dispute
The legislative fight is unfolding alongside the federal stablecoin law Trump signed last year, the Guiding and Establishing National Innovation for U.S. Stablecoins Act, which set baseline rules for “payment stablecoins” and included a prohibition on paying interest or yield to holders solely for holding the tokens. After the law’s enactment, the Office of the Comptroller of the Currency moved to implement it for entities under its jurisdiction, including standards for issuance, reserves, redemption, and oversight.
In a proposed rule published in the Federal Register, the OCC said it expects issuers could attempt to route prohibited interest or yield through affiliates or related third parties. The proposal describes a presumption that an issuer is effectively paying yield if it has arrangements with an affiliate or related third party and the stablecoin holder receives consideration in cash, tokens, or other forms solely in connection with holding, using, or retaining the stablecoin. The notice set a public comment deadline of May 1, 2026.
Regulatory limits on interest
Industry estimates have underscored what is at stake for banks. Standard Chartered has projected that stablecoins could draw about $500 billion of deposits out of U.S. banks by the end of 2028, with regional lenders viewed as more exposed because deposits are a larger share of their funding. Stablecoins are typically backed by liquid assets such as U.S. Treasury bills and are widely used for trading and transfers, while some platforms have promoted them as a way to earn returns.
Lawmakers working on the CLARITY Act have also faced additional points of contention beyond yield, including provisions tied to anti-money laundering compliance and ethics-related language that has drawn scrutiny in the broader crypto debate. With the stablecoin yield question unresolved, the bill’s timeline has tightened as Congress juggles competing legislative priorities. The White House and congressional negotiators said discussions continued this week – By Content Syndication Services.