Senator Cynthia Lummis (R-Wyo.) on Thursday said the Senate Banking Committee pulled the crypto bill the day before a scheduled vote due to bank concerns about losing deposits, pushing the legislation into spring.
Why The Vote Was Canceled
Lummis told Maria Bartiromo on Fox that the committee had scheduled a markup but pulled it the day before “not because just of what Coinbase had said about it, but because there was other concern.”
The primary concern: banks and credit unions have committee members worried they will lose deposits if crypto firms can pay interest on stablecoins.
This fear overrode Coinbase (NASDAQ:COIN) CEO Brian Armstrong’s public opposition.
Senate Majority Leader John Thune (R-SD) assured Lummis he will reserve time on the Senate schedule for later this spring, despite the difficulty of securing floor time.
The White House Meeting Failed
A White House meeting Monday aimed at breaking the stalemate between banks and crypto firms ended without agreement, according to Reuters.
Representatives from the American Bankers Association, Independent Community Bankers of America, Blockchain Association, and The Digital Chamber attended.
Both sides called it constructive, but fundamental disagreements remained. One source anticipated subsequent meetings to resolve the impasse.
The Stablecoin Interest Battle
The clash centers on whether crypto firms can pay users interest for holding stablecoins—dollar-pegged tokens like Circle's (NYSE:CRCL) USDC (CRYPTO: USDC) that typically offer 3-4% returns.
Banks see an existential threat.
If customers can earn that kind of yield on stablecoins versus under 0.1% on checking accounts, they’ll move money out of banks and into crypto.
Banks need those deposits to fund loans to businesses and communities.
Banks warned that $6.6 trillion in deposits could leave the traditional banking system if crypto firms can offer higher yields.
Crypto companies argue that rewards are essential for attracting customers and that banning them would be anti-competitive.
What This Means
The spring timeline removes hope for near-term regulatory clarity that could unlock institutional capital.
The Senate Banking Committee postponed the vote last month amid fears the bill lacked support to advance. The House passed its version in July.
The bill’s failure comes as Bitcoin (CRYPTO: BTC) trades down nearly 40% from its October peak, yet banks still fear deposit flight.
This suggests banks see crypto as a long-term structural threat regardless of short-term price action.
The spring timeframe pushes resolution closer to 2026 midterm election season, when political appetite for controversial legislation typically declines.
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