Crypto Firms Are Offering Banks a Deal to Save a Key US Bill

In Brief

• Stablecoin rules are the main obstacle blocking passage of a major US crypto bill.
• Crypto firms are offering banks reserve-sharing and issuance partnerships to ease concerns.
• No agreement has been reached, leaving the bill’s future uncertain.

For weeks, one of the most consequential crypto market-structure bills in the US has been stuck in limbo. While lawmakers debate details, the real standoff has been happening between crypto firms pushing for regulatory clarity and banks worried about what stablecoins could do to their deposits.

Moreover, crypto companies appear to be trying a different approach, one designed specifically to address banks’ biggest fears.

A Bill Stuck Between Stablecoins and Banks

At the center of the dispute is stablecoin regulation. Lawmakers agree on the need for clearer rules.

However, banks continue to push back on proposals they believe could accelerate deposit outflows if stablecoins become widely used for payments.

Therefore, progress on a crypto market-structure bill that would define how digital assets are issued and traded has slowed down.

Without buy-in from traditional lenders, momentum on the legislation is fading.

Indeed, traditional lenders worry that if stablecoin issuers or exchanges are allowed to offer attractive yields or rewards, it could prompt significant customer fund migration away from bank deposits.

New Compromises Aimed at Banks

In recent discussions, crypto firms introduced proposals designed to address banks’ core concerns while preserving key elements of the stablecoin ecosystem.

Another proposal would enable traditional banks to issue stablecoins in partnership with crypto firms. Potentially creating a hybrid model that aligns the interests of both sides.

Essentially, these proposals aim to make stablecoin regulation more attractive to financial institutions by ensuring banks have a stake in the system.

What’s Next for the Bill

Lawmakers are still debating whether to incorporate these new ideas into the bill’s language. On the other hand, banks’ resistance continues to be cited as a major blockage for progress.

If no compromise emerges soon, the crypto market-structure bill may continue to languish. Delaying federal clarity on a host of crypto issues.

In short, the negotiations underscore how deeply stablecoin regulations are mixed with broader concerns over banking competition.

As a result, it raises concerns about deposit stability, and the future of digital assets in mainstream finance.