The March 1 Deadline Wall Street Doesn't Want You Watching
Yesterday at the White House, representatives from JPMorgan, Goldman Sachs, Bank of America, Wells Fargo, Citi, and PNC sat across a table from Coinbase, Ripple, a16z, and Paxos.
The crypto side came to negotiate.
The banks came with a written document. They're calling it "prohibition principles." It demands a total ban on stablecoin yield. Not a cap. Not a compromise. A ban on "any form of financial or non-financial consideration to a payment stablecoin holder in connection with the purchase, use, ownership, possession, custody, holding or retention of a payment stablecoin."
Read that language again. They want to ban rewards for owning stablecoins. For holding them. For using them. They drafted legal language designed to close every possible loophole before one even opens.
The meeting obviously ended without a deal. The White House gave both sides a deadline of March 1 to find compromise language. But the banks aren't interested in compromise.
Why?
Because stablecoin yields are currently paying 3% to 5%. I was gobsmacked to find out that the average savings account in America pays somewhere between 0.39% and 0.60%.
How there aren't riots on the streets for such blatant daylight robbery is beyond me.
Standard Chartered estimates that if stablecoin yields go unrestricted, they could drain $500 billion from developed economy bank deposits.
That's what this is really about. The banks are worried about their funding model. Deposits are how banks lend money. If deposits leave for on-chain yield products that pay 50 to 100 times more, the entire economics of traditional banking start to crack.
So they're lobbying to make it illegal.
American Banker ran a piece last week that compared this fight to the 1970s, when banks lobbied to kill money market funds for the exact same reason. MMFs offered higher rates than banks. Banks fought them. Banks lost. Money market funds grew into a multi-trillion-dollar industry.
You don't lobby to ban something that doesn't work. You don't draft "prohibition principles" and bring them to the White House for a product that poses no threat. The intensity of the opposition is the signal.
And for investors, this fight is drawing a very clear map.
The March 1 deadline the White House set means we'll know the shape of US stablecoin regulation within weeks. If yield gets banned outright, stablecoin innovation moves offshore and the protocols already operating in friendlier jurisdictions win by default. If the banks lose, or a compromise allows some form of yield, the platforms already building that infrastructure become some of the most important companies in digital finance.
Either outcome creates winners. The question is which ones.
This is exactly the kind of setup I spend most of my time researching. I've read the developer docs and token economics for over 1,000 crypto projects at this point, and the ones positioned on the right side of this fight are a very short list: stablecoin infrastructure, on-chain yield rails, cross-border settlement, tokenisation etc.
That's where I'm focused, and I'll be closely monitoring which protocols benefit most depending on how this shakes out.
Six of the largest banks in America are spending political capital to stop stablecoins from paying interest. That tells you everything about where this industry is heading.
And it could all be decided in just 17 days.
Cheers,
Louis Sykes
Senior Crypto Analyst, All Star Charts
