Banks Demand Total Ban on Stablecoin Interest in White House Talks

VADODARA, February 11, 2026 — Banking representatives have proposed a total ban on stablecoin interest payments during a second White House meeting, according to a document shared by Decrypt senior reporter Sander Lutz. This latest crypto news reveals a hardening stance that exceeds current legislative drafts and threatens to dismantle yield-generating mechanisms across the cryptocurrency ecosystem.

Investigation: The White House Stablecoin Yield Proposal

Banking sector representatives argued for prohibiting any monetary or non-monetary compensation for holding, using, or owning payment stablecoins. They insisted exceptions must be "extremely limited" to prevent undermining the ban's principle. This position surpasses the latest market structure bill draft, which permitted yield payments for certain stablecoin activities.

A person familiar with the meeting described discussions as productive but noted "nothing was resolved." Future talks will move to the Senate Banking Committee and industry self-regulatory bodies. According to on-chain data from Etherscan, stablecoin transaction volumes have remained elevated despite regulatory uncertainty, suggesting market participants anticipate volatility.

Market Context & Historical Precedent

Historically, banking institutions have resisted crypto innovation that threatens traditional revenue streams. The current proposal mirrors 2021's debate over bank charter limitations for crypto firms. In contrast, the crypto industry has consistently argued for regulatory clarity rather than outright bans.

Market structure suggests this conflict represents a classic liquidity grab. Traditional banks seek to control digital asset flows by eliminating competitive yield products. The proposal creates a regulatory asymmetry where traditional savings accounts can offer interest while stablecoin holdings cannot.

Related developments include Ripple's characterization of recent talks as productive and political action committees committing millions to pro-crypto Senate bids.

Technical Architecture & Price Action

The regulatory uncertainty coincides with technical weakness across crypto markets. Bitcoin faces critical support at the $68,000 level, representing the 0.618 Fibonacci retracement from its recent all-time high. A break below this level would invalidate the current bullish structure.

Market analysts note that stablecoin yields often function as a risk-free rate proxy in DeFi ecosystems. Removing this mechanism could compress lending margins and reduce protocol revenues. On-chain data indicates increased stablecoin transfers to centralized exchanges, suggesting precautionary selling pressure.

The proposal contradicts technological reality. Smart contract platforms like Ethereum automatically execute yield payments through code, not traditional banking infrastructure. Regulating this requires understanding Ethereum's technical architecture, particularly its proof-of-stake consensus mechanism.

By The Numbers

Why It Matters

The proposed ban threatens to reshape the $160B stablecoin market fundamentally. Stablecoin yields currently provide a risk-free rate alternative in DeFi ecosystems. Eliminating this mechanism could force capital into traditional banking products or unregulated offshore platforms.

Market structure suggests this represents a strategic move by traditional finance to control digital asset flows. Banks recognize stablecoins as potential competitors to deposit accounts. By prohibiting interest payments, they eliminate a key competitive advantage.

Historical cycles indicate regulatory uncertainty typically precedes market consolidation. The 2017 ICO crackdown and 2021 China mining ban both triggered temporary selloffs followed by institutional accumulation periods.

Expert Commentary

"The banking proposal represents a fundamental misunderstanding of crypto-economic incentives. Stablecoin yields aren't interest payments in the traditional sense—they're protocol rewards for providing liquidity and security. Banning them would force these activities offshore or into opaque smart contracts," according to the CoinMarketBuzz Intelligence Desk.

Market Outlook & Price Scenarios

Two technical scenarios emerge from current market structure. The bearish scenario involves regulatory overreach triggering capital flight from stablecoin protocols. The bullish scenario assumes industry pushback leads to compromise legislation.

• Bullish Invalidation Level: $72,000 resistance. A sustained break above this level would indicate market dismissal of regulatory threats and renewed institutional accumulation.
• Bearish Invalidation Level: $68,000 support. A daily close below this Fibonacci level would confirm breakdown of the current market structure and likely trigger further deleveraging.

The 12-month institutional outlook depends on legislative outcomes. If the banking proposal advances, expect continued pressure on DeFi protocols and stablecoin issuers. If compromise emerges, the market could see renewed institutional interest in regulated yield products.