The US crypto industry's efforts to advance the Digital Asset Market Clarity Act have been hindered by a contentious issue surrounding stablecoin yields, which bankers argue could jeopardize bank deposits. In a rebuttal to a White House report downplaying the risks, the American Bankers Association asserts that the economists' analysis was misguided. The ABA economists argue that the focus should be on the potential consequences of allowing stablecoin yields, rather than banning them. The dispute has stalled the Senate legislation, with lawmakers attempting to find a compromise that addresses the bankers' concerns about depositors seeking higher yields from stablecoins.
The proposed ban on yield for payment stablecoins is seen as a necessary precaution to prevent stablecoins from becoming a risky substitute for insured bank deposits. The ongoing debate has sparked urgency, with Senator Cynthia Lummis emphasizing the need for clarity on the issue. The bankers warn that inaction on stablecoin yields could lead to a rapid expansion of the stablecoin market, resulting in a significant migration of funds out of bank deposits. The ABA also notes that leading stablecoin issuers would likely deposit their reserves in larger banks, bypassing community banks.