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Sen. Tim Scott urges compromise to allow stablecoin rewards, warns against advertising as bank
Summary
Sen. Tim Scott said lawmakers can allow crypto firms to pay rewards on stablecoins while requiring consumer-protection limits to prevent them from presenting rewards as bank deposits; Coinbase CEO Brian Armstrong had earlier criticized bank influence on the Clarity Act markup.
Sen. Tim Scott, chairman of the Senate Committee on Banking, Housing, and Urban Affairs, said Congress can permit crypto firms to offer rewards on stablecoins while writing safeguards to ensure consumers are not misled into thinking those products are bank accounts.
"Allowing for the crypto firms to pay rewards is a good thing," Scott said in an interview. He added that firms "cannot advertise as if they were a bank," and that consumer-protection language will be necessary to make that distinction.
The interview followed a White House meeting between administration officials, crypto executives and banking representatives to try to resolve differences holding up the so-called Clarity Act. Earlier in the segment, Coinbase CEO Brian Armstrong criticized the most recent draft, saying banks were "trying to undermine the president's crypto agenda" and calling parts of the markup a "giveaway to the banks." Armstrong said he spoke up for the roughly 52,000,000 Americans who have used crypto.
Scott emphasized a technical distinction he said lawmakers must preserve: "Stablecoins are backed 1 to 1," he said, contrasting that with commercial banks' fractional-reserve deposits. He argued that difference means rule-writing should focus on preventing consumer confusion rather than treating stablecoin rewards as equivalent to insured bank deposits.
On deposit-flight concerns raised by banking advocates, Scott said he did not expect a mass withdrawal of deposits and said regulators and lawmakers can craft rules to limit risks while preserving competition. He also urged both sides to concede some points so the United States can remain "the crypto capital of the world."
Scott told the interviewer that he and lawmakers would aim to account for community banks: "We are gonna make sure that whatever passes, we are taking care of our community bankers," he said, noting the role local banks play for first-time homebuyers and small businesses.
The interview did not include a legislative text vote or a finalized agreement. Scott said both sides remained "at the table" and staff were expected to continue negotiations.
