The US crypto industry's push for regulatory clarity, as outlined in the Digital Asset Market Clarity Act, has stalled due to disagreements over stablecoin yields. Bankers argue that these yields pose a threat to traditional bank deposits, contradicting a recent report from White House economists. The American Bankers Association claims that the White House's analysis is flawed, focusing on the wrong scenario and underestimating the risks associated with stablecoin rewards programs.
The ABA's economists believe that prohibiting yield on payment stablecoins is essential to prevent them from becoming a risky substitute for insured bank deposits. This debate has delayed the Senate's consideration of the Clarity Act, with lawmakers attempting to find a compromise that addresses the concerns of both the banking and crypto industries. Senator Cynthia Lummis, chair of the Banking Committee's digital assets subcommittee, has emphasized the need for clarity on this issue, warning that further delays could hinder the bill's progress.
The banking industry's latest arguments suggest that failing to intervene in stablecoin yields could lead to a rapid expansion of the stablecoin market, potentially accelerating the migration of funds out of traditional bank deposits and into stablecoins.