- The White House is now leading discussions on the crypto market structure bill, with a proposed draft imposing penalties for “yield on idle” stablecoin balances.
- Exchanges like Coinbase could lose a significant revenue stream, as its agreement with Circle generates hundreds of millions in stablecoin income.
- Enforcement authority would be granted to the SEC, CFTC, and Treasury, with potential fines of up to $500,000 per violation per day.
White House officials have taken a prominent role in shaping cryptocurrency legislation, introducing a draft that could penalize companies offering rewards on idle stablecoin balances. According to a report by Eleanor Terrett, the draft text from White House Crypto Council Executive Director Patrick Witt states that restrictions on stablecoin rewards would be “narrow in scope.”
Consequently, this proposal targets the practice of exchanges earning yield from passive stablecoin holdings, a key revenue source for companies like Coinbase. The exchange’s deal with Circle gives it 50% of the interest from USD Coin (USDC) reserves, generating over $170 million in a single quarter. However, under the new “anti-evasion” language, such rewards could face severe penalties enforced by multiple federal agencies.
Meanwhile, discussions around the CLARITY Act have reportedly become more constructive. Ripple CEO Brad Garlinghouse told Fox Business he estimates an 80% to 90% chance the bill passes Congress by April, echoing sentiments shared by Senator Bernie Monero. Representatives from major crypto firms attended the talks, while banks participated through trade associations.
Paul Grewal, the chief legal officer at Coinbase, wrote on X that the dialogue was “constructive and the tone cooperative,” noting “more progress” was made. Despite this legislative movement, retail sentiment around major stablecoins and Bitcoin remained in ‘bearish’ territory, with BTC trading around $67,200.
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