The US crypto industry's key policy effort, the Digital Asset Market Clarity Act, remains stalled due to disagreements over stablecoin yield. Bankers claim that the White House economists' recent report underestimated the risks of stablecoin yield to bank deposits. The American Bankers Association argues that the report analyzed the wrong scenario and that allowing stablecoin yield could lead to a significant migration of deposits out of traditional banks. The conflict has delayed the Senate legislation, with lawmakers predicting a necessary hearing in the Senate Banking Committee by the end of the month.
The bankers' concerns center around the potential for stablecoin yield to outpace the interest offered by banks, leading depositors to switch to stablecoins. A proposed compromise would ban yield on stablecoin holdings that resemble deposit accounts, but the banks have not endorsed this solution. The debate's prolongation makes it increasingly difficult to pass the Clarity Act, with crypto insiders and bank representatives weighing in on the issue.
The bankers warn that inaction on stablecoin yield could lead to rapid market growth, accelerating the migration of deposits out of banks.