Legislation to structure the U.S. stablecoin market remains stalled as a dispute over yields keeps lawmakers and industry players at odds. At the heart of the impasse is a clash between crypto firms and traditional banks over what kinds of reserves stablecoin issuers should be allowed to hold — and whether those reserves create systemic risks. The disagreement has held up a broader market-structure bill and prompted a flurry of talks in Washington aimed at a compromise. Coinbase has been among the most vocal defenders of stablecoins. Faryar Shirzad, Coinbase’s chief policy officer, pushed back on comparisons between stablecoins and risky prime money market funds (MMFs) that exacerbated earlier financial panics, arguing instead that stablecoins more closely follow the “secure” government-backed MMF model. “But it is just the opposite (of projected financial crisis) – stablecoins will be the future safe haven,” Shirzad wrote on X. Coinbase’s chief legal officer, Paul Grewal, made a similar point on CNBC, saying stablecoin reserves “are not re-lent out like the fractionalized reserve system used by banks. They’re backed dollar-for-dollar in short-term instruments, principally U.S. Treasuries. They are much safer than the banks.” Critics, however, warn the law on the table — the GENIUS Act — leaves room for riskier reserve compositions. The bill would permit reserves to include uninsured deposits, repurchase agreement (repo) loans, and MMF shares. Financial reform group Better Markets and the Bank Policy Institute (BPI), a banking lobby, say those allowances could expose stablecoins to the same kind of bank-like runs seen in 2008 and 2020, with BPI calling stablecoins a “less regulated cousin” of MMFs. Those competing frames — crypto proponents emphasizing Treasury-backed safety, and banks and reformers warning of MMF-style vulnerabilities — are central to the negotiation over stablecoin yields that has held up progress on the market-structure bill. Lawmakers and stakeholders are continuing talks. Reports say Democrats have scheduled a meeting to discuss the legislation after a White House convening on Feb. 2 aimed at brokering a yield deal between banks and the crypto industry by the end of that month. Still, it’s unclear whether the bill will advance out of the Senate Banking Committee by Q1 2026. Disclaimer: AMBCrypto's content is informational and not investment advice. Trading, buying, or selling cryptocurrencies carries high risk; readers should conduct their own research. © 2026 AMBCrypto Read more AI-generated news on: undefined/news