Some crypto companies have proposed giving community banks a bigger stablecoin role as Senate negotiations stall over the contentious market structure bill. These firms are looking for ways to ease the legislative impasse that has kept the bill from advancing. The legislation, which has already passed the House, is currently stalled in the Senate. Negotiations are ongoing regarding whether stablecoin issuers should be allowed to offer yields, a point of contention that banks argue could divert funds from traditional savings accounts.

Anonymous sources revealed that crypto firms are now suggesting measures like involving community banks more prominently in the stablecoin ecosystem. This could include allowing these banks to hold reserves for stablecoin issuers or even assisting them in issuing their own stablecoins through partnerships. The goal is to create a framework that satisfies both the crypto industry and the traditional banking sector.

A recent White House meeting between crypto representatives and banking groups ended without any concrete agreement, highlighting the complexities of the negotiations. Senate Banking Committee Chairman Tim Scott expressed optimism, stating that allowing crypto firms to offer rewards is beneficial, but they must be careful not to present themselves as banks. He emphasized that there would be no deposit flight, a concern raised by traditional banks.

Senator Scott noted that discussions would continue, and both sides remain committed to finding a solution. He mentioned that they plan to reconvene with consumer banks soon to further discuss the issue. The overarching aim is to position America as a leader in the crypto space, which is a sentiment shared by many in the industry.

The market-structure bill still requires Senate approval, and while a Republican draft was released in January, it has yet to gain support from Democrats. A markup session held in late January allowed the bill to advance from the Agriculture Committee, but it will need the backing of at least seven Democrats to proceed further.

The Senate Banking Committee's version of the bill proposes a stricter approach, necessitating alignment between the two drafts before any further progress can be made. The situation remains fluid, with ongoing discussions highlighting the challenges of integrating crypto into the existing financial framework. As the debate unfolds, the crypto industry is watching closely, hoping for a resolution that will pave the way for stablecoin innovation and adoption.