The White House is advancing strict regulatory measures that would prohibit offering yield or interest on payment stablecoins. Proposed enforcement provisions include civil penalties of $500,000 per violation, aimed at preventing firms from structuring products that resemble yield farming on stablecoin balances. Stablecoin Yield Bank Proposal Details from the administration’s third ongoing meeting with crypto industry leaders and banking representatives were shared by journalist Eleanor Terrett via social media. She reported that the latest session was smaller than the previous week’s and included representatives from Coinbase, Ripple, and a16z, along with trade groups such as the Blockchain Association and the Crypto Council. However, no individual bank representatives attended, with the sector instead represented through trade associations. During the meeting, White House Crypto Council Executive Director Patrick Witt presented draft text that became the main focus. The language acknowledged concerns raised by financial institutions in last week’s “Yield and Interest Prohibitions Principles” document while clarifying that any restrictions on rewards would be narrow in scope. Under the current direction, earning yield on idle stablecoin balances appears to be off the table, with discussions now centered on whether firms can offer rewards tied to certain user activities. One crypto-side attendee told Terrett that bank concerns appear to be driven more by competitive pressure than by deposit risk. A bank-side source shared that trade groups are still pushing to include a deposit outflow study in the proposal to examine how the growth of payment stablecoins could affect these transactions. The same individual added that the proposed anti-evasion language would give enforcement authority to the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). This provision includes civil penalties of $500,000 per violation per day for firms that attempt to bypass restrictions on paying yield on idle balances. Discussions Continue as Industry Looks for Compromise The crypto journalist said that public statements from attendees are once again being described as “productive” and “constructive.” People familiar with the matter noted that there was a noticeable difference in this round of talks, with the White House taking the lead in guiding the discussion instead of allowing crypto firms and banking trade groups to steer the conversation. The latest meeting follows two previous ones where officials and industry participants debated whether the digital assets should be allowed to offer yield, the possible effects on bank deposits, and broader concerns about competitiveness and innovation if such limits are introduced. Bank trade groups are now expected to brief their members on the latest developments and assess whether there is room for compromise on allowing crypto firms to offer stablecoin rewards. One individual also said that an end-of-month timeline for progress appears realistic, with negotiations set to continue in the coming days. The post White House Proposes $500K Daily Penalties for Yield Evasion appeared first on CryptoPotato .
