US proposal seeks to ban interest on idle stablecoins

A proposal discussed at a White House meeting on stablecoins would effectively ban interest payments on balances held in crypto wallets, Eleanor Terrett, host of Crypto in America, reported on X. The meeting took place on Feb. 19. A draft of the measure reportedly includes a prohibition on paying interest on idle stablecoin balances, with violations subject to a civil penalty of $500,000 per day per incident. According to multiple attendees, banking representatives are more concerned about increased competition from crypto firms than potential deposit outflows. However, they are pushing for the regulatory bill to mandate a study on deposit flight resulting from the growth of payment stablecoins. Enforcement authority would be granted to the U.S. Securities and Exchange Commission (SEC), the Department of the Treasury, and the Commodity Futures Trading Commission (CFTC). The banking sector plans to brief its member firms on the meeting and explore potential compromises regarding the scope of permissible stablecoin rewards. A source noted that further negotiations are expected to resume within days, adding that setting a deadline by the end of this month is realistic.