The US crypto industry's efforts to advance the Digital Asset Market Clarity Act have been hindered by disagreements over stablecoin yields. The American Bankers Association has argued that the White House's Council of Economic Advisers has misjudged the risks associated with stablecoin yields, claiming that they could lead to a significant migration of funds out of bank deposits.
The ABA asserts that the CEA's analysis is flawed, as it fails to consider the potential consequences of allowing stablecoin yields to continue unchecked. Instead, the ABA advocates for a ban on stablecoin yields, citing the need to protect bank deposits and maintain the stability of the financial system. The debate over stablecoin yields has stalled the progress of the Clarity Act, which aims to regulate the US crypto market.
Despite predictions that the bill could be heard in the Senate Banking Committee by the end of the month, a session has yet to be scheduled. The controversy surrounding stablecoin yields has sparked concerns among lawmakers, with some arguing that the rewards programs offered by stablecoin issuers could lure depositors away from traditional banks. The ABA has warned that the absence of intervention on stablecoin yields could lead to a rapid expansion of the stablecoin market, potentially reaching $2 trillion, and accelerate the migration of funds out of bank deposits. The organization has also expressed concerns that the reserves deposited by stablecoin issuers would likely be placed in larger institutions, rather than community banks.