WASHINGTON, March 5, 2026 — Negotiations over landmark U.S. cryptocurrency legislation have stalled after banks said they cannot support a White House-backed compromise on stablecoin rewards, raising uncertainty over whether Congress will pass a crypto market structure bill this year, according to a Reuters report.
The impasse centers on provisions in the proposed Digital Asset Market Structure and Investor Protection Act (CLARITY Act) that would determine whether crypto companies and stablecoin intermediaries can offer reward or yield-based incentives to users.
Banking groups argue the proposal could encourage deposit outflows from traditional banks, while crypto firms say the ability to offer rewards is essential for competition and user adoption.
Dispute over stablecoin reward provisions
The bill previously stalled in January after banks objected to language that would allow stablecoin issuers and crypto companies to provide yield-bearing products and reward programs that could attract funds away from bank deposits.
A compromise proposed by the White House last month would allow certain types of rewards tied to specific payment activities, such as peer-to-peer transactions, but would restrict rewards on idle stablecoin holdings, according to four people familiar with the negotiations.
Crypto companies have signaled support for the compromise framework, the sources said.
Banks, however, maintain that even limited reward programs could lead to deposit migration from the banking system, according to industry representatives involved in the discussions.
Banking industry raises deposit flight concerns
The American Bankers Association said lenders have offered proposals aimed at advancing crypto legislation while protecting the stability of the banking system.
“The risks to economic growth and financial stability are real if policymakers don’t get this right,” the association said in a statement.
Banking industry representatives argue that allowing intermediaries to offer rewards linked to stablecoins could weaken the deposit base banks rely on to fund lending activity.
A report from Standard Chartered estimated that stablecoins could draw as much as $500 billion in deposits away from U.S. banks by 2028.
Legislative timeline pressures
The negotiations come as lawmakers face a narrowing legislative window before the U.S. midterm election cycle begins.
If Congress does not advance the legislation in the coming months, the chances of passing a comprehensive crypto market structure bill could diminish significantly, according to policy analysts and industry advocates.
To move forward, the bill would need support from at least seven Democratic senators, while also resolving differences between drafts produced by the Senate Banking Committee and the Senate Agriculture Committee.
The final legislation would then compete for floor time with other policy priorities before lawmakers depart Washington later this year to campaign for the midterm elections.
Industry and political divisions remain
The crypto industry has spent years lobbying for legislation that clarifies when digital tokens fall under securities law, commodities regulation or other financial frameworks.
The sector also spent more than $119 million supporting pro-crypto candidates during the 2024 U.S. election cycle, according to campaign finance data.
However, divisions remain within Congress over additional provisions that some lawmakers want to include in the bill, such as restrictions on elected officials profiting from crypto ventures and expanded anti-money-laundering requirements.
Those issues, along with the dispute over stablecoin reward programs, continue to complicate efforts to reach a final agreement.
