Banks protest high-yield tokens, and the crypto regulatory battle continues to escalate in Washington.

According to ChainCatcher, citing The Wall Street Journal, the crypto industry and the banking sector are engaged in a fierce lobbying battle over digital tokens that offer annualized returns, a struggle that could undermine legislative processes aimed at pushing cryptocurrencies into the mainstream financial system.

The crux of the dispute lies in what crypto companies call "rewards"—annualized returns paid periodically based on the proportion of assets held by investors. This type of mechanism is particularly common in stablecoins. Banks view the practice of companies like Coinbase offering approximately 3.5% returns on stablecoins as essentially similar to high-yield deposits, without the stringent regulatory requirements faced by banks when accepting public deposits. Banking organizations have therefore sent numerous letters to lawmakers, warning that such "yield-paying stablecoins" will have a devastating impact on small and medium-sized banks in the United States.

In contrast, the national average interest rate for ordinary interest-bearing checking accounts in the United States is currently below 0.1%. This debate is one of the reasons that the Senate Banking Committee postponed its vote on the cryptocurrency market structure bill, originally scheduled for Thursday. JPMorgan Chase, Citigroup, and other large banks are resisting stablecoin rewards while simultaneously developing their own cryptocurrency products and partnership programs.

Several banks, including Bank of America, are considering issuing their own stablecoins. Analysts say Coinbase's withdrawal of support for the bill could seriously jeopardize its prospects, despite other crypto companies still expressing support. This dispute highlights a tension: on one side, the rapidly growing crypto industry in Washington is actively leveraging its increasing lobbying influence; on the other, the traditional banking industry has maintained close ties with Congress for decades.

Last year, the U.S. Treasury estimated that stablecoins could draw up to $6.6 trillion in deposits from the U.S. banking system, partly due to the "yield" mechanism they offer. In contrast, according to the latest data from the Federal Reserve, as of early January, total deposits in U.S. commercial banks amounted to approximately $18.7 trillion. The U.S. government insures deposits up to $250,000 per account, but at the same time, it imposes strict regulations on banks' operations and financial soundness.