The US crypto industry's efforts to advance the Digital Asset Market Clarity Act have been hindered by disagreements over stablecoin yields, with bankers claiming that these rewards programs pose a significant risk to bank deposits. In response to a White House report downplaying the threat, the American Bankers Association argues that the wrong scenario was analyzed. Instead of considering the impact of banning stablecoin yields, the focus should be on the consequences of allowing such returns. The ABA economists assert that prohibiting yield on payment stablecoins is a necessary safeguard, enabling stablecoins to develop as a payment innovation rather than a risky substitute for insured bank deposits.
This debate has stalled the Senate legislation for months, with lawmakers attempting to find a compromise that would ban yield on stablecoin holdings resembling deposit accounts and only permit rewards programs for activity. However, the banking industry remains unconvinced, warning that the absence of intervention on stablecoin yield could lead to rapid market growth, accelerating the migration of funds out of bank deposits.