White House gives March 1 ultimatum to settle stablecoin rewards dispute

The White House has ordered parties to settle a dispute over stablecoin reward and yield programs by March 1 as part of efforts to advance the CLARITY Act, placing a tight timetable on a question that could determine how digital payments and lending interact with the U.S. banking system.

At stake is whether issuers and platforms can provide financial incentives tied to payment stablecoins without triggering securities or banking classifications. Bank representatives circulated a document titled "Yield and Interest Prohibition Principles" that states in full: "No person may provide any form of financial or non-financial consideration to a payment stablecoin holder in connection with the payment stablecoin holder’s purchase, use, ownership, possession, custody, holding, or retention of a payment stablecoin." That draft allows limited carve-outs, but only "provided such exemptions are limited in scope and 'must not drive deposit flight that would undercut Main Street lending.'"

Regulators have signaled concern that reward programs could resemble unregistered interest-bearing products, creating prudential and investor-protection risks. Banking leaders argue yields offered on stablecoins threaten insured deposits and could shift funding away from traditional lenders. Industry participants counter that rewards are essential for competitiveness, user adoption and parity with centralized payment options.

The White House Crypto Policy Council has convened negotiations between crypto firms and traditional finance to try to bridge the gap. Participants described at least one meeting on Feb. 10 as "productive," but no compromise has been reached and officials urged attendees to reach agreement by March 1. Observers say the deadline is intended to force resolution ahead of final CLARITY Act drafting and to provide clearer regulatory guidelines while balancing innovation and consumer protection.

The dispute is unfolding alongside agency rulemaking. On Feb. 11 the National Credit Union Administration issued a Notice of Proposed Rulemaking to implement the GENIUS Act for payment stablecoin issuer applications by federally insured credit union subsidiaries. NCUA Chairman Kyle Hauptman said, "We’re on track to meet the Congress’ July 18 deadline. Credit unions should be aware that they won’t be at a disadvantage versus other entities, whether in timing or standards." The NCUA comment period closes April 13, which could set parallel supervisory standards for one class of stablecoin issuer even as the CLARITY Act negotiations proceed.

The March 1 ultimatum compresses a policy fight with broad market and consumer implications. If the prohibition model prevails, platforms may be barred from offering routine rewards tied to holdings, potentially limiting retail yield opportunities and reinforcing banks' retail deposit franchises. If narrow exemptions are allowed, regulators will confront how to prevent runs or deposit migration that could impair community lending.

Crypto executives have voiced sharp objections to restrictive drafts of the legislation. Coinbase CEO Brian Armstrong has emerged as a prominent critic, warning that the bill could amount to a de facto ban on tokenized equities and impose restrictions on decentralized finance that the crypto community views as undermining financial privacy.

With approximately 10 days until the White House deadline, negotiators face a binary choice: lock in tight prohibitions that favor deposit safety or carve out market access that preserves yield competition. The resolution will shape the CLARITY Act’s market-structure outcomes and influence whether stablecoins evolve primarily as narrow payment rails or as broader, interest-bearing digital assets.