The US crypto industry's main legislative push, the Digital Asset Market Clarity Act, has stalled due to disagreements over stablecoin yields. Bankers argue that these yields pose a threat to traditional bank deposits. In response to a White House report downplaying the risks, the American Bankers Association claims that the wrong scenario was analyzed. Instead of examining a ban on stablecoin yields, the focus should be on the consequences of allowing such yields to continue.
The ABA economists argue that prohibiting yield on payment stablecoins is a necessary precaution to prevent them from becoming a risky substitute for insured bank deposits. This dispute has delayed Senate legislation for months, with lawmakers attempting to find a compromise.
The proposed ban on yield for stablecoin holdings that resemble deposit accounts has not been met with enthusiasm from banks. As the debate continues, the chances of passing the Clarity Act diminish. The bankers warn that without intervention, the stablecoin market could rapidly expand, leading to a significant migration of funds out of bank deposits.