The number of major obstacles facing new U.S. cryptocurrency legislation has decreased as lawmakers prepare to return to session, according to a top White House advisor.
Patrick Witt, executive director of the President's Council of Advisors for Digital Assets, told attendees at a Solana Policy Institute event in Brooklyn on Monday that negotiations have successfully narrowed a list of previously irreconcilable differences.
“I’m encouraged by the fact that we solved a lot of these [issues] that felt unsolvable,” Witt said.
Congress has returned to Washington, D.C., following a two-week recess. A key Senate committee is expected to hold a hearing and vote on a sweeping bill designed to clarify the jurisdictional boundaries between the SEC and the CFTC.
The battle over stablecoin rewards
The legislation aims to establish clear rules for exchanges and mandatory disclosure requirements, but the treatment of stablecoin rewards remains a central point of contention.
While a stablecoin law passed in July prohibits issuers from paying interest directly to holders, it does not currently restrict third-party platforms like Coinbase from offering rewards. Crypto firms argue that such limitations will stifle industry innovation.
Conversely, the American Bankers Association (ABA) argues that allowing rewards could trigger a massive flight of deposits from traditional banks. In a recent analysis, ABA economists claimed the White House is focusing on the wrong metric.
“The concern is not about whether banning yield would affect bank lending—it is about whether allowing it ‘would encourage deposit flight,’ they said.",
A recent White House report from the Council of Economic Advisers (CEA) suggested that stablecoin rewards are unlikely to significantly impact bank lending or broader credit conditions.
However, the ABA countered that the CEA paper avoids the more critical scenario of yield-paying payment stablecoins scaling rapidly and disrupting the existing financial architecture.
