The US crypto industry's push for regulatory clarity, embodied in the Digital Asset Market Clarity Act, remains stalled due to disagreements over stablecoin yields. Bankers argue that these yields pose a significant threat to bank deposits, contradicting a recent White House economic report. The American Bankers Association asserts that the White House economists' analysis is flawed, as it considers the wrong scenario.
Instead of evaluating the impact of banning stablecoin yields, the focus should be on the consequences of allowing such yields. The ABA economists emphasize that prohibiting yield on payment stablecoins is a necessary precaution to prevent them from becoming a risky alternative to insured bank deposits. This debate has been ongoing, with the conflict over stablecoin yields contributing to the delay in the Senate's consideration of the Clarity Act. Lawmakers had proposed a compromise to ban yield on stablecoin holdings that resemble deposit accounts, but banks remain unconvinced.
The longer the debate continues, the more challenging it will be to pass the Clarity Act. The bankers warn that without intervention, the stablecoin market could rapidly expand, leading to a significant migration of funds out of bank deposits, particularly from community banks.