The US crypto industry's primary legislative effort, the Digital Asset Market Clarity Act, has been stalled due to disagreements over stablecoin yields. Bankers have argued that the rewards programs offered by stablecoins pose a threat to bank deposits, contradicting a recent report by White House economists. The American Bankers Association asserts that the White House analysis is flawed, as it fails to consider the potential consequences of allowing stablecoin yields to continue. The ABA economists argue that prohibiting yield on payment stablecoins is essential to preventing them from becoming a risky substitute for insured bank deposits.
The debate has delayed the Senate legislation, with lawmakers attempting to find a compromise that would ban yield on stablecoin holdings resembling deposit accounts. However, the banking industry remains unsatisfied, warning that the absence of intervention could lead to a rapid scaling of stablecoin markets, resulting in a significant migration of funds out of bank deposits.