Banks are expected to renew their efforts to stop crypto platforms from paying yield on stablecoin balances, but TD Cowen's Washington analyst Jaret Seiberg assigns only a 10% probability to Congress enacting such a ban over the next two years, according to a Monday policy note shared with Bitcoin Magazine and clients.

At issue is whether exchanges and other platforms can offer yield or rewards to investors who keep dollar-pegged stablecoins on their platforms. Stablecoins are blockchain tokens designed to hold a one-to-one value against the U.S. dollar. Seiberg views legislative action as unlikely, though he identifies a "narrow path" for a ban.

His rationale is procedural as much as political. A standalone stablecoin yield bill might find the 60 Senate votes needed to end debate and advance most legislation more easily than the broader crypto market structure legislation, which failed a cloture vote 49-50 on Sept. 15 and which Seiberg has already called effectively dead for this Congress following the Democratic midterm sweep.

A ban, he wrote, would benefit banks, and he expects the industry to renew its push in the next Congress, which convenes in January 2027, on the theory that Democratic wins open a path.

Why Seiberg Still Sees a Path

That path rests on a shift in the Senate. Key crypto advocates have retired or lost their seats, while skeptics of the industry are being elevated. Sen. Elizabeth Warren is likely to chair the Banking Committee, the panel with jurisdiction over stablecoin bills, and Sen. Sherrod Brown, a longtime industry critic, regained his Ohio seat after crypto-backed spending of roughly $64 million failed to stop him, Seiberg wrote before the votes were counted.

It is not his base case. Crypto politics are "complex," he wrote, which is why the probability starts at 10%.

Some Democrats will resist treating stablecoin yield outside a broader package. Seiberg again sees no path for the Clarity Act, arguing Democrats will insist on ethics and investor-protection provisions that President Trump would reject. That split, he wrote, makes Democrats unlikely to unite behind a yield-only bill.

Democrats are not aligned on the substance either. Sen. Angela Alsobrooks, a lead Democrat on crypto policy, has backed paying rewards for using stablecoins rather than for passively holding them — a distinction that shaped the Tillis-Alsobrooks compromise text during Clarity talks.

There is also a perception problem. Congress would be asked to stop voters from earning a return on stablecoin holdings even though they can earn one on savings accounts and money market funds. Seiberg questions whether Democratic leaders want a vote that could be framed as taking money from retail investors.

What GENIUS Already Banned — and What It Left Open

The fight is leftover business from the GENIUS Act — formally the Guiding and Establishing National Innovation for U.S. Stablecoins Act, the first comprehensive federal framework for payment stablecoins — which President Trump signed on July 18, 2025, as Public Law 119-27. The statute bars permitted and foreign payment stablecoin issuers from paying "any form of interest or yield" solely for holding, using, or retaining a payment stablecoin. It does not explicitly cover exchanges and other intermediaries — the gap banks refer to as the loophole.

The American Bankers Association and state bankers associations urged Congress late last year to treat platform rewards as banned interest, and the ABA and the Independent Community Bankers of America later pressed the Senate to harden Clarity language against balance- and tenure-based rewards. The ICBA has warned that yield-bearing payment stablecoins could pull deposits from community banks and cut local lending.

Stablecoins are the main trading pair for bitcoin on most exchanges, so the yield fight lands on how bitcoin markets settle and how platforms attract dollar balances. The final GENIUS rules from the Office of the Comptroller of the Currency (OCC), effective in January 2027, left the third-party rewards question for case-by-case review after banks had hoped the agency would close it. House Democrats, meanwhile, are sketching their own market structure approach with a bigger role for the SEC.

Seiberg's note treats a narrow yield ban as the one bank ask that might still clear 60 votes even if the Clarity Act does not. The reason the odds are not zero, he wrote, is that community banks are effective at arguing that stablecoin yields pull funds out of banks and hurt local lending — and small banks have a record of getting Congress to act. He remains dubious.

The test for the next Congress is whether banks can peel yield off the broader crypto fight, or whether Democratic splits and the retail-investor optics keep the probability where Seiberg put it on Monday: one in ten.

This article first appeared on Bitcoin Magazine and was written by Micah Zimmerman.