White House Approves Stablecoin Reward Caps: Surprising Shift in Crypto Regulation

White House Approves Stablecoin Reward Caps: Surprising Shift in Crypto Regulation

The third White House meeting between cryptocurrency industry representatives and banks brought significant shifts in the approach to stablecoin rewards. White House adviser Patrick Witt proposed that stablecoin rewards be tied only to transaction activity, not balances, in an effort by regulators to limit their influence on the banking system.

Long-running discussions that began in February have now moved toward a possible compromise that could significantly affect the future of the U.S. crypto market. While no definitive agreement has been reached, representatives of cryptocurrency firms such as Coinbase and Ripple have described the talks as constructive and accommodating.

But banks are expressing concerns about competitiveness and a potential deposit outflow, with the Treasury Department estimating that widespread adoption of stablecoins could drain up to $6.6 trillion from the banking system. Yet regulators appear to be addressing issues of competitive pressure rather than real threats of deposit flight.

These discussions show that cryptocurrency regulation in the US is at a crossroads – and the future of stablecoin rewards could fundamentally affect the functioning of the market and the banking sector. Only time will tell whether a balance can be found between supporting innovation and protecting the traditional financial system.

*This is not investment advice.

The Coingarage Team