The US crypto industry's main legislative effort, the Digital Asset Market Clarity Act, has been stalled due to disagreements over stablecoin yields, which bankers claim pose a threat to bank deposits. In response to a White House report downplaying the risks, the American Bankers Association argues that the administration's economists are analyzing the situation from the wrong perspective.
Instead of considering the effects of banning stablecoin yields, they should be looking at the potential consequences of allowing such yields to continue. The ABA economists claim that the White House report 'minimizes the core risk by starting from the wrong question' and that prohibiting yield on payment stablecoins is a necessary precaution to prevent them from becoming a substitute for insured bank deposits.
This dispute has been ongoing and has already delayed Senate legislation for months. Lawmakers had attempted to find a compromise by proposing a ban on yield for stablecoin holdings that resemble deposit accounts, but the banking industry remains unconvinced. The longer the debate continues, the more challenging it will be to pass the Clarity Act through the Senate. The bankers argue that failing to intervene in the stablecoin market now could lead to rapid growth, with the market potentially expanding from $300 million to $2 trillion, and that yield would become a key driver of this growth, accelerating the migration of funds out of bank deposits.