TD Cowen Gives Stablecoin Yield Ban 10% Odds as Banks Plan Push in Democrat-Led Congress

Banks will try again to stop crypto platforms from paying yield on stablecoin balances, but TD Cowen’s Washington analyst Jaret Seiberg puts only a 10% chance on Congress enacting such a ban over the next two years, he wrote in a Monday policy note shared with Bitcoin Magazine and clients.

The issue is whether exchanges and other platforms can offer yield or rewards to investors who keep dollar-pegged stablecoins on their platforms. Seiberg views action as unlikely, though he sees a “narrow path” for a ban.

His rationale is procedural as much as political: it may be easier to find 60 Senate votes on stablecoin yield alone than on the broader crypto market structure bill, which failed a cloture vote 49-50 on Sept. 15 and which he already called effectively dead for this Congress after the Democratic midterm sweep.

A ban, he wrote, would benefit banks. He expects them to renew the push in the next Congress on the theory that Democratic wins open a path.

That path rests on a shift in the Senate. Key crypto advocates retired or lost, while skeptics are being elevated. Sen. Elizabeth Warren is likely to chair the Banking Committee, and Sen. Sherrod Brown, a longtime critic of the industry, regained his Ohio seat after crypto-backed spending of about $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 President Trump would reject. That split, he wrote, makes Democrats unlikely to unite behind a yield-only bill.

Democrats are not united 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.