The US crypto industry's bid for regulatory clarity, the Digital Asset Market Clarity Act, remains stalled due to disagreements over stablecoin yields. Bankers have reignited the debate, claiming that stablecoin reward programs endanger bank deposits. In response to a White House report downplaying the risks, the American Bankers Association argues that economists analyzed the wrong scenario, focusing on the consequences of banning stablecoin yields instead of allowing them. The ABA economists believe that prohibiting yield on payment stablecoins is a necessary precaution, enabling stablecoins to develop as a payment innovation rather than a substitute for insured bank deposits.
This dispute has delayed Senate legislation, with lawmakers attempting to find a compromise that would ban yield on stablecoin holdings resembling deposit accounts and permit rewards programs for activities, similar to credit-card rewards. However, banks remain unsatisfied with the proposed compromise. The debate's prolongation makes it increasingly challenging to pass the Clarity Act, with crypto insiders and bank representatives weighing in on the issue. The bankers argue that inaction on stablecoin yields would allow the market to grow rapidly, accelerating the migration of funds out of bank deposits, with leading stablecoin issuers likely to deposit reserves in larger institutions rather than community banks.