The US crypto industry's efforts to advance the Digital Asset Market Clarity Act have been hindered by disagreements over stablecoin yields, which bankers argue pose a risk to their deposits. In response to a White House report downplaying the risks, the American Bankers Association has countered that the analysis is flawed, focusing on the wrong scenario. The ABA economists argue that allowing stablecoin yields could lead to a significant migration of deposits out of traditional banks, undermining their stability. The dispute has stalled the Senate's consideration of the Clarity Act, which aims to regulate the US crypto market.
Lawmakers had proposed a compromise that would ban yield on stablecoin holdings resembling deposit accounts, but bankers remain unsatisfied. As the debate continues, the prospects for passing the Clarity Act become increasingly uncertain. The bankers warn that without intervention, the stablecoin market could rapidly expand, leading to a significant shift of deposits away from traditional banks, with potentially severe consequences for the financial system.