The US crypto industry's flagship policy effort, the Digital Asset Market Clarity Act, remains stalled due to disagreements over stablecoin yields, which bankers argue pose a significant risk to their deposits. In a rebuttal to a White House report downplaying these risks, the American Bankers Association claims that economists are assessing the wrong scenario.
Instead of analyzing the effects of banning stablecoin yields, they should consider the consequences of allowing such yields to continue. Bankers argue that permitting stablecoin yields could lead to a massive migration of deposits out of traditional banks and into stablecoin markets, potentially scaling from $300 million to $2 trillion. This could disproportionately affect community banks, as larger institutions are more likely to benefit from stablecoin reserve deposits.
The debate has stalled the Clarity Act, with lawmakers struggling to find a compromise that addresses the concerns of both the banking and crypto industries.