Banks Likely to Build Own Digital Dollars if Crypto Rewards Survive CLARITY Act

Stablecoin rewards emerge as central fault line in Washington's crypto policy debate

Published on Feb. 11, 2026

Got story updates? Submit your updates here. ›

Washington's stablecoin policy debate has shifted from whether dollar-linked tokens should exist to whether they should be treated as deposits, especially if consumers can earn interest-like rewards for holding them. A recent White House meeting failed to break the deadlock between banking and crypto trade groups, with stablecoin interest and rewards remaining the central issue. As stablecoins grow beyond a niche plumbing layer, the policy question becomes one of where the safest 'cash' balance sits in the financial system and who benefits from it.

Why it matters

Banks care about stablecoins because the dominant model reroutes 'deposit-like' money away from bank balance sheets and into short-term US government debt, reducing banks' cheap funding sources and impacting their loan books and margins. If stablecoins can deliver yield, they start to resemble a savings product, posing a direct threat to banks' deposit franchise, particularly for regional lenders that rely heavily on retail funding.

The details

The dispute is centered on whether stablecoins should be treated as deposits, especially if consumers can earn interest-like rewards for holding them. Banks argue that even if stablecoin issuers are constrained, third parties can still offer incentives that appear to be interest, drawing customers away from insured deposits. Crypto firms counter that rewards are a competitive necessity, and banning them would lock in bank power by limiting how new entrants can compete for balances. This pressure has slowed legislative momentum, with Coinbase CEO Brian Armstrong saying the company could not support the CLARITY Act in its current form due to constraints on stablecoin rewards.

  • The GENIUS Act, signed by President Trump in July 2025, could be implemented by July 2026.
  • In mid-January 2026, total stablecoin supply hit a fresh high of $311.332 billion, based on DeFiLlama data.

The players

Scott Bessent

The US Treasury Secretary.

Brian Armstrong

The CEO of Coinbase.

Mike Belshe

The CEO of BitGo.

Visa

A global payments technology company that reported more than $3.5 billion in annualized stablecoin settlement volume as of November 30, 2025, and expanded USDC settlement to US institutions in December.

Got photos? Submit your photos here. ›

What they’re saying

“Get CLARITY done.”

— Mike Belshe, BitGo CEO (CryptoSlate)

“We must not let individuals continue to damage private property in San Francisco.”

— Robert Jenkins, San Francisco resident (San Francisco Chronicle)

What’s next

The judge in the case will decide on Tuesday whether or not to allow Walker Reed Quinn out on bail.

The takeaway

The stablecoin policy debate has shifted to focus on whether these digital assets should be treated as deposits, especially if they can offer interest-like rewards to consumers. This dispute has become a central fault line, with banks and crypto firms at odds over the implications for deposit funding and competition. The outcome will shape the future of stablecoin business models and who controls the consumer's default dollar balance.