Regulation of Stablecoins: Yield is the Issue
February 2, 2026—The White House hosted a two-hour meeting today with representatives from the banking and cryptocurrency industry, two sectors that are likely to compete for capital.
Though the meeting was not broadcast live, it reportedly included representatives from the American Bankers Association, the Crypto Council for Innovation, Blockchain Association, PayPal, Ripple, Tether, the Independent Community Bankers of America, and others. According to crypto journalist Eleanor Terrett, the two-hour meeting resulted in a “constructive discussion” on the risks and rewards of stablecoin yield.
“Issues were framed so that both sides know where boundaries are,” Terrett posted on X on Monday.
Regulations & The CLARITY Act
Since President Donald Trump signed the GENIUS Act into law in July 2025, the government has been establishing a comprehensive federal regulatory framework for stablecoins—a token used to purchase cryptocurrencies. Unlike cryptocurrencies, stablecoins are pegged to fiat currencies like the U.S. dollar. However, the two new digital currencies are interrelated.
The meeting today reportedly focused on the regulatory details on stablecoins. They are also discussing legislation that would regulate the cryptocurrency market. The CLARITY Act, H.R. 3633, would give the Commodity Futures Trading Commission exclusive regulatory jurisdiction over transactions in digital commodities.
Loophole in Stablecoin Bill
According to The Street’s Anand Sinha, the banking industry is concerned about what they say is a loophole in the GENIUS Act that allows “stablecoin holders to gain rewards, if not interest.” That could spark a flight of capital from banks to stablecoins. The stablecoin bill prohibited stablecoins from offering yield, but because it allows exchanges with crypto intermediaries, it is seen as offering a way around that prohibition.
The bottom line is that the banking and crypto industries may compete with each other for capital. Both sectors, the banking and crypto industries, are lobbying the government.
GENIUS Flaw: Fraud
Meanwhile, the White House meeting comes as state legal authorities in New York are criticizing the GENIUS Act, saying it permits fraud. According to CNN, NY Attorney General Letitia James and several district attorneys wrote in a letter that the new law allows firms issuing stablecoins to “avoid significant regulatory requirements that are needed to combat financing terrorism, drug trafficking, money laundering, and especially cryptocurrency fraud.”
UK Blocks Ads by Coinbase
In other recent news, the United Kingdom’s Advertising Standards Agency banned a key platform, Coinbase, from some advertisements, calling them “irresponsible for trivializing the risks of trading cryptocurrency.”
“Thirty-five complainants challenged whether the ads were irresponsible because they trivialised the risks of cryptocurrency and implied it was a solution to prevalent financial concerns…. It also stated that cryptocurrency was largely unregulated and high risk, and that buyers should be prepared to lose all of their money. Cryptocurrency was therefore unlikely to be suitable for all consumers, especially those experiencing financial difficulties such as those referenced in the ads,” according to the agency.
Crypto Prices Weaker
The meeting also comes as the cryptocurrency industry experiences a dip in confidence. Major coins such as Bitcoin and Ethereum lost value over the last week. Bitcoin, for example, has fallen about 40 percent from its peak in 2025. Bloomberg News correspondents Sidhartha Shukla and Olga Kharif reported about the weak demand for the token:
“Unlike the October drawdown, there’s been no obvious spark, cascading liquidations or systemic shock — just fading demand, thinning liquidity, and a token that’s untethered to broader markets. Bitcoin has failed to respond to geopolitical stress, dollar weakness, or risk rallies. Even during gold and silver’s violent swings in recent weeks, crypto saw no rotation.”
See past reporting on the GENIUS Act, https://www.globaleconomicreport.com/senate-stablecoin-bill-would-give-crypto-some-credentials/
