The Digital Chamber (“TDC”) greatly appreciates the White House’s role in convening stakeholders and fostering candid conversations toward a workable resolution to address ongoing issues regarding payment stablecoins in forthcoming market structure legislation. We are also grateful to members and staff of the Senate Banking Committee for their continued hard work and thoughtful engagement on these complex issues. Through these discussions, a “yield and interest prohibition” principles (“the Prohibition Principles”) document was put forth by banking industry advocates.
As the largest and oldest blockchain trade association, with 250+ members spanning traditional financial institutions, crypto-native firms, leading banks, stablecoin issuers, and infrastructure providers, TDC is uniquely positioned to advance a balanced resolution. We offer principles that support payment stablecoins as payment instruments without disrupting the ecosystem or harming established firms.
Principles
Retain Section 404 Exemptions to Avoid Material Ecosystem Disruption
- Section 404 of the Senate Banking Committee’s recent market structure discussion draft prohibits interest or rewards paid for merely holding payment stablecoins, while establishing permissible activities regarding use of payment stablecoins.
- Without exemptions (E) and (F), for example, the legislation could significantly impair U.S. dollar-denominated stablecoins currently deployed in Decentralized Finance (“DeFi”) protocols and as Liquidity Provider (“LP”) pairs on DeFi exchanges, which pay users in exchange for facilitating liquidity. Eliminating these provisions would severely undermine dollar dominance in the digital asset ecosystem, effectively ceding this area to foreign jurisdictions and risks foreign currencies replacing U.S. dollar denominated stablecoins in these essential portions of the digital asset ecosystem.[1]
Enforcement/Evasion/Representations and Disclosures
- We understand financial institutions’ concerns regarding community banking and main street lending. Assuming exemptions (b)(2)(E) and (b)(2)(F) are retained, we concur that no person shall circumvent a direct or indirect yield prohibition and that firms must make accurate disclosures clarifying that any yield earned is not comparable to interest.[2]
Retain “Deposit Impact” Study
- We support the requirement present in Section 404 of the most recent Banking market structure discussion draft that regulators submit a study two years after enactment examining the benefits of increased payment stablecoin activity and its impact on deposits at insured depository institutions. We are confident such a study will affirm empirical analysis showing that stablecoins complement, rather than disrupt, the traditional banking system.[3]
We have a real window to cement American leadership in digital finance, but that window will not stay open indefinitely. We are committed to working with the White House and key stakeholders to advance durable market structure legislation while protecting and accelerating the innovation already taking root across the country.
If you have any questions, please reach out to policy@digitalchamber.org
[1] Further, disallowing payments for LP pairs containing payment stablecoins could introduce new risks, forcing users to commit their liquidity in ways which enhance impermanent loss risks rather than allowing users to pair their assets with a trusted dollar-denominated payment stablecoin.
[2] Further, The Digital Chamber wholly supports tailored changes to banking laws which support the growth of community banking and local lending such as proposed in the Main Street Capitol Access Act. Community banking is a vital portion of the American economy, and The Digital Chamber believes that blockchain-enabled technologies paired with community banking services and infrastructure will be a boon to the American consumer.
[3] Cong, Lin William, Stablecoins and Banking: Deposit Dynamics, Financial Stability, and Regulatory Design (December 07, 2025), available at https://ssrn.com/abstract=6163266.