White House Pushes Banks on Stablecoin Rewards Compromise in Crypto Market Structure Bill Talks

White House Pushes Banks on Stablecoin Rewards Compromise in Crypto Market Structure Bill Talks

The White House is ratcheting up pressure on Wall Street banks to accept a compromise on stablecoin rewards as part of the broader digital asset market structure legislation, marking what could be a pivotal turning point in the monthslong stalemate that has held up the crypto industry’s top policy priority in Washington. The latest closed-door negotiating session, held on Thursday, February 19, 2026, produced more concrete progress than previous rounds, with banking representatives actively drafting compromise language for the first time.

At the center of the dispute is Section 404 of the Digital Asset Market Clarity Act — the Senate’s flagship crypto market structure bill — which addresses whether stablecoin issuers should be permitted to offer interest, rewards, or yield to holders of their dollar-pegged tokens. The outcome of this negotiation carries enormous implications not only for the cryptocurrency industry but also for the broader financial system, as it will determine whether stablecoins can compete directly with traditional bank deposits.

TL;DR

• White House negotiators told bankers that some stablecoin rewards will remain in the next draft of the crypto market structure bill
• Banking representatives actively worked on compromise language for the first time in three rounds of talks
• The bill’s stablecoin provisions would overhaul the GENIUS Act passed last year
• Limited rewards for transaction-related activities are being discussed, but not for stablecoin holdings resembling deposit accounts
• Bitcoin traders watch policy progress alongside market volatility near $67,000

A Shift in Negotiating Dynamics

This week’s meeting represented a notable shift in tone from previous sessions. In the two prior White House gatherings — one on February 2 and another around February 10 — banking industry representatives largely refused to engage on the stablecoin rewards question, insisting instead on a blanket prohibition that would prevent crypto firms from offering any yield on stablecoin holdings. That hardline stance appears to be softening.

According to two people familiar with the negotiations, the White House team — led by President Donald Trump’s crypto adviser Patrick Witt — arrived at Thursday’s session with a clear position: certain stablecoin rewards programs would remain in the next draft of the bill regardless of banking industry objections. The message to bankers was unambiguous: it is time to find a deal and move the legislation forward.

Crucially, banking representatives at the meeting did not simply reject the White House position. Instead, they actively participated in crafting language that would allow limited rewards for specific activities and transactions while preserving protections for their core deposit-taking business. The White House is expected to circulate an updated draft incorporating this compromise language to banking industry participants for review.

Why Banks Are Worried

The banking industry’s apprehension about stablecoin rewards is rooted in a fundamental business model concern. Traditional banks profit from the spread between the interest they earn on loans and investments and the relatively low rates they pay on customer deposits. If stablecoin issuers — companies like Circle (USDC), Tether (USDT), and potentially new entrants backed by tech firms — can offer attractive yields on dollar-denominated digital tokens, customers might move significant deposits out of banks and into stablecoin wallets.

The fear is not abstract. Total stablecoin market capitalization has grown steadily, and the prospect of yield-bearing stablecoins approved under federal law could accelerate that trend dramatically. Banks argue that a rapid migration of deposits from the regulated banking system to crypto platforms could reduce their lending capacity, increase funding costs, and potentially create systemic risks.

Crypto industry advocates counter that stablecoin rewards would simply bring competitive pressure to an industry that has long benefited from regulatory protection, ultimately benefiting consumers through better rates and more financial innovation.

The GENIUS Act Overhaul

One of the more complicated aspects of the current negotiation is that the stablecoin provisions being debated would not simply create new rules — they would actually overhaul the GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins), which was signed into law last year. The GENIUS Act established the initial regulatory framework for payment stablecoins but was deliberately silent on the question of yield and rewards, a vagueness that both sides are now seeking to resolve through the market structure bill.

The fact that Congress is revisiting stablecoin legislation so quickly after passing the GENIUS Act reflects the rapid pace of developments in the crypto industry and the recognition that the initial framework left critical questions unanswered. The current debate over Section 404 is essentially a second bite at the apple — an opportunity to clarify rules that were deliberately deferred during the first legislative push.

What’s at Stake for Bitcoin and Crypto Markets

While the stablecoin debate may seem disconnected from Bitcoin’s day-to-day price action, the implications for the broader crypto market are significant. Clear, comprehensive regulation of stablecoins would reduce uncertainty for institutional investors considering crypto exposure, potentially unlocking fresh capital inflows at a time when Bitcoin ETFs have been experiencing sustained outflows.

Bitcoin is currently trading near $67,000, down approximately 38% from its October 2025 peak near $109,000. The market has been under pressure from multiple directions: macroeconomic headwinds including private credit market stress, geopolitical tensions involving Iran, and billions of dollars in liquidations across the derivatives market. Against this challenging backdrop, the prospect of regulatory clarity on stablecoins represents one of the few positive catalysts on the horizon.

The crypto market structure bill more broadly would establish comprehensive rules for how digital assets are traded, custodied, and regulated in the United States — providing the legal certainty that institutional players have long cited as a prerequisite for deeper engagement with the asset class.

Industry Reaction and Next Steps

Crypto industry participants at the meeting privately expressed cautious optimism that a deal could be reached, according to sources familiar with the discussions. However, significant hurdles remain. The compromise language still needs to be reviewed and approved by banking industry lawyers and executives, many of whom remain fundamentally opposed to allowing any form of yield on stablecoins.

The Senate Banking Committee, chaired by Senator Tim Scott, will ultimately need to vote on the revised bill before it can proceed to the full Senate. The committee has been waiting on a resolution of the stablecoin rewards issue before scheduling a markup session, meaning that further delays in the negotiations translate directly into delays in the legislative process.

For the White House, the urgency is clear. The administration has staked significant political capital on its pro-crypto posture, and failure to deliver on market structure legislation ahead of the midterm elections would represent a significant setback. The decision to push bankers toward a compromise — rather than simply accepting their demands for a stablecoin yield ban — signals that the White House is willing to expend political capital to get a deal done.

Bitcoin Miners Rally Amid Policy Optimism

In an interesting juxtaposition to the broader market weakness, crypto-related stocks rallied on Thursday, with Bitcoin miners CleanSpark (CLSK) and MARA Holdings (MARA) both gaining approximately 6%. The gains came despite Bitcoin’s relatively muted price action, suggesting that investors may be positioning for improved regulatory tailwinds even as the spot market remains cautious.

The mining sector has been under intense pressure in 2026, with public mining companies collectively selling record amounts of Bitcoin to cover operational costs during the downturn. According to industry data, miners including MARA, CleanSpark, Riot Platforms, Core Scientific, and Bitdeer have sold approximately 32,000 BTC in Q1 2026 alone — surpassing the previous record of 20,000 BTC sold in Q2 2022 during the depths of the last bear market.

Why This Matters

The White House’s decision to push for a stablecoin rewards compromise represents the most significant policy development for crypto in weeks. If bankers accept the proposed language, it could unlock progress on the broader market structure bill — legislation that would fundamentally reshape how digital assets are regulated in the United States. For investors, the combination of regulatory progress and a stabilizing Bitcoin price near $67,000 suggests that the worst of the February sell-off may be over, though macro headwinds remain a significant risk factor. Watch for the circulation of the updated bill draft and any public statements from banking industry participants in the days ahead.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. Cryptocurrency investments carry significant risk, and readers should conduct their own research before making investment decisions.