When the White House spokesperson casually characterized the second encryption conference as a “productive working meeting,” those truly sitting on either side of the negotiation table were clear: this is not polite talk, nor is it compromise.
February 11, 2026, Washington. Nearly a month has passed since the Senate Banking Committee was originally scheduled to review the CLARITY Act, and this bill, which should have become a milestone in U.S. digital asset regulation, remains stuck on a seemingly narrow but deadly question — Can stablecoins pay interest to holders?
This is not a technical detail. This is a battle over hundreds of billions directing the flow of funds, a true face-off between banks and the crypto industry.
1. The bill has passed the House of Representatives but is stuck on the word "interest"
● First, let's clarify one thing: The CLARITY Act (Digital Asset Market Clarity Act) is not stillborn. On the contrary, it passed the House overwhelmingly on July 2025, with 294 votes in favor and 134 against. This is nearly miraculous in the current climate of bipartisan strife.
● The core logic of the bill is quite “American”: split digital assets into two halves - cryptocurrencies like Bitcoin and Ethereum fall under the jurisdiction of the Commodity Futures Trading Commission (CFTC); those that meet the definition of securities fall under the jurisdiction of the Securities and Exchange Commission (SEC). Regulators return to their respective homes, and the industry no longer needs to struggle for survival in a narrow space.
But the problem lies in the Senate. To be specific, it lies in the revised draft from January 15.
● In the version presented by Senate Banking Committee Chairman Tim Scott, a clause was added that the crypto industry could not accept: prohibiting non-bank entities from paying “passive income” to stablecoin holders. In other words, Coinbase can no longer issue a 3.5% annual reward to USDC customers, even if that is a marketing cost, not interest.
Coinbase immediately turned against this. CEO Brian Armstrong described this proposal as “worse than maintaining the status quo,” retracting support. The bill promptly stalled in the Senate.
2. What are banks afraid of? The $6.6 trillion ghost
The banking industry's attitude is not “against,” but to strangle.
● On February 10, at a White House meeting, three major organizations: the American Bankers Association (ABA), the Bank Policy Institute (BPI), and the Independent Community Bankers of America (ICBA) unusually appeared together. They brought a leaked document titled bluntly: “Principles Prohibiting Income and Interest.”
● The core demand of this document is very simple: to completely, thoroughly, and without loopholes prohibit stablecoins from paying any form of financial or non-financial benefits. Not only interest is prohibited, but rewards and rebates are as well, and an additional “anti-evasion clause” must be added — as long as your product resembles interest-bearing deposits, it is illegal.
Why so harsh?
● The banking industry has calculated. Currently, the average U.S. bank deposit rate is 0.1%, while Coinbase offers a 3.5% reward for USDC. If funds flow freely, the U.S. Treasury predicts that as much as $6.6 trillion in deposits could flow out of the banking system.
● What does $6.6 trillion mean? It is equivalent to a quarter of all deposits in the U.S. This is not just a loss of business; it is a blow to the entire commercial banking model.
● In the legislative priorities of the ABA this year, it is clearly written: “Prevent stablecoins from becoming deposit substitutes... reduce the lending capacity of community banks.” Community banks — these four words mean political correctness in Washington. You are not opposing Wall Street; you are opposing “local lending for the public good.”
3. The crypto industry's counterattack: This is not interest, this is points
Faced with a full-scale assault from the banks, the crypto industry’s defense strategy has undergone subtle changes.
● Initially, they tried to reason: stablecoin rewards are not interest; they are “customer loyalty programs,” points rewards, marketing costs. The 3.5% reward for Coinbase One members is fundamentally different from bank deposits.
● However, the meeting on February 10 indicated that this line of reasoning was ineffective. The banks clearly understood that cash equivalents disguised as “points” have almost zero technical barriers. Today you can call it a reward; tomorrow it can be renamed a dividend.
So the crypto industry adjusted its negotiating stance.
● Dan Spuller, head of industry affairs at the Blockchain Association, revealed after the meeting that the banks expressed willingness to consider “any proposed exemption” for the first time. This was unimaginable two weeks ago — previously, the banks’ attitude was zero tolerance. Now, they are willing to discuss which activity-based rewards could be allowed.
● Ripple's chief legal officer Stuart Alderoty described this meeting as having a “compromise atmosphere.” Coinbase's chief legal officer Paul Grewal emphasized that “there is still a lot of work to be done.”
● Translated into plain language: banks have shifted from “absolutely not allowed” to “you prove what should be allowed,” while the crypto industry has shifted from “this is points” to “at least keep some part.” Negotiations have finally entered substantial terms.
4. Scott Basent's hammer: Coinbase named as "recalcitrant"
● Last week, Treasury Secretary Scott Basent publicly named Coinbase on Fox News, using a derogatory term that is extremely rare in diplomacy: “recalcitrant actor”.
● This does not conform to Washington’s unspoken rule of “not tearing each other apart during consultation.” Basent clearly does not care; he has even said harsher words during Senate hearings: crypto companies that do not want the bill “should move to El Salvador.”
● Patrick Witt, the White House crypto advisor, also frequently sends signals: President Trump's crypto agenda must move forward, individual companies' resistance cannot become an obstacle.
● Political pressure is tangible. Coinbase is in an awkward position — it needs to protect the actual revenue of USDC business while not being seen as a “disruptor” in the legislative process. When it withdrew support in January, it spoke of “continuing to engage in legislative discussions”; after the February meeting, Paul Grewal emphasized “hoping all parties remain at the negotiation table.”
This is not rhetoric. This is looking for a new red line on the eve of crossing the old one.
5. The shadow of the GENIUS Act and CFTC’s southern soldiers
● There is a document not laid out on the conference table: the GENIUS Act. BitGo CEO Mike Belshe directly called prior to the meeting: the crypto and banking industries should stop rehashing the issues already resolved by GENIUS.
● GENIUS is a specialized stablecoins bill passed at the end of 2025, one of the core contents is prohibiting stablecoin issuers from directly paying interest to holders. In other words, Tether and Circle cannot issue interest on their own, which is a point the banks have already won.
● The current dispute is whether third-party platforms can offer rewards. Banks say they cannot; crypto says they can. Belshe's logic is simple: the banks won that fight with GENIUS, and the crypto industry accepted it. Now, can we still get the bill through by fighting it again in the market structure bill? This is the compromise strategy of the crypto industry and a way to give banks an out. But evidently, the banking sector is not satisfied with this.
● Meanwhile, the CFTC and SEC's “Project Crypto” joint task force is advancing the asset classification standards in tandem. This harmonious process of regulators is running parallel to the legislative efforts in Congress, providing technical preparation for the bill to take effect quickly after passing. If the legislative window opens, the administrative machinery can be activated immediately.
6. Time window: Countdown to the end of February
● On Polymarket, the probability of the CLARITY Act passing legislation in 2026 is currently reported at 56%. This figure has not shown significant fluctuations in the past two weeks, reflecting the market's calm judgment on the deadlock — neither pessimistic nor optimistic. The real time pressure comes from the Senate's legislative agenda.
● A research report from Guotai Junan Securities indicates that the Senate Banking Committee has been asked to prioritize housing policy legislation. The CLARITY Act is expected to be pushed back for consideration until late February or March. This means there is about a two-week time window for the White House and lobbying groups to come up with a compromise text that senators are willing to vote for.
● Dan Spuller stated bluntly: “The banks did not negotiate around the bill text but proposed broader restrictive principles.” In other words, the crypto industry has not even seen the specific clauses; what is placed in front of them is a “legislative blueprint.”
This is the most disadvantageous position in negotiations.
7. Interest decomposition: This has never been a dispute of principles
Reducing this controversy to its most fundamental level, the logic is exceptionally clear:
● Banks want to protect a $6.6 trillion deposit pool; any potentially alternative financial tool must be blocked. This is a matter of survival, not regulatory preference.
● The crypto industry wants to preserve the application scenarios of stablecoins; a 3.5% reward is the direct incentive for users to go on Binance and use Coinbase. Removing the reward makes stablecoins no different from pieces of digital dollars.
● The White House wants a “photo op with President Trump signing the crypto bill”; the industry details can be compromised, but the legislative milestone cannot be absent.
The intersection of interests among the three parties is extremely narrow. The so-called “compromise atmosphere” is essentially the crypto industry constantly retreating, with banks calculating whether the distance of their retreat can still ensure safety.
The only substantial progress from the February 10 meeting is that the banks have finally eased their stance to “be willing to consider exemption proposals.” But please note the original wording: “any proposed exemption.” The subtext of this sentence is: you propose, I approve. The approval power lies in my hands.
This is not releasing the noose. This is changing the noose from wood to steel and then telling the other party they can choose to tighten or loosen it.
For the crypto industry, the most realistic outcome may not be “complete victory,” but rather extracting a compromise text allowing limited rewards from the banks before the end of February, to get the bill moving.
After all, if they lose the stablecoin rewards clause, they can still make a comeback on other battlefields such as CFTC jurisdiction, DeFi exemptions, and self-custody protections.
And for the bill to remain deadlocked means everything goes to zero.
A 56% probability will not stay forever. In February, someone in Washington will have to make a choice.
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