WASHINGTON — A Senate proposal aimed at resolving tensions between cryptocurrency firms and traditional banks over stablecoin regulations has encountered significant resistance from both industries, according to sources familiar with the negotiations. Senator Thom Tillis (R-NC) is preparing to unveil a compromise framework this week that would establish federal oversight for dollar-pegged cryptocurrencies while addressing banks’ concerns about competitive disadvantages.
The dispute centers on whether stablecoin issuers should be permitted to pay interest on deposits — a practice currently restricted for non-bank entities under existing financial regulations. Banking lobbyists argue this creates an unlevel playing field, while crypto advocates maintain the restrictions stifle innovation in digital assets.
Analysts note the Tillis proposal represents the most serious legislative effort to date to regulate the $150 billion stablecoin market. ‘This is the first time we’re seeing concrete language that attempts to bridge the gap between these competing sectors,’ said a financial policy expert at the Brookings Institution, speaking on condition of anonymity about the ongoing negotiations.
If adopted, the framework could provide much-needed regulatory clarity for stablecoins like Tether and USD Coin. However, sources indicate both banking groups and crypto industry representatives have raised objections to key provisions during private briefings, suggesting difficult negotiations ahead.