White House Pushes Stablecoin Yield Compromise in CLARITY Act Talks

The White House has stepped in to break the ongoing impasse over stablecoin regulation, introducing a compromise tied to the proposed CLARITY Act during discussions at ETHDenver. The proposal would prohibit companies from offering yield on idle stablecoin balances, a move that significantly narrows one of the most contentious issues in U.S. crypto regulation.

According to reports, Crypto Council for Innovation Executive Director Patrick Witt presented the draft language to industry leaders and banking representatives following a closed-door meeting. The revised framework shifts the debate away from blanket yield permissions and instead allows rewards linked to user activity, such as transactions or network participation. Yield on passive, idle holdings would be banned under the proposal.

Regulators are also considering strict anti-evasion provisions. Sources indicate that the Securities and Exchange Commission (SEC), the Treasury Department, and the Commodity Futures Trading Commission (CFTC) would have authority to enforce the idle-yield restriction. Civil penalties could reportedly reach $500,000 per violation per day, underscoring the seriousness of the proposed enforcement measures.

The negotiations involve major crypto firms including Coinbase, Ripple, and Andreessen Horowitz, alongside influential banking groups such as the American Bankers Association and the Bank Policy Institute. While crypto companies argue that excessive restrictions could stifle innovation and entrench traditional financial incumbents, banks warn that stablecoin rewards programs may draw deposits away from regulated institutions and increase systemic risk.

Despite recent volatility in prediction markets regarding the CLARITY Act’s chances of passing, optimism has slightly improved as stakeholders work toward a March 1 deadline for compromise language. Witt noted that the gap between banks and crypto firms has “shrunk considerably,” signaling meaningful progress.

If finalized, the updated stablecoin yield provisions could clear the way for the Senate Banking Committee to reschedule its delayed markup session, potentially accelerating broader U.S. crypto legislation and providing long-awaited regulatory clarity for digital asset markets.