The US crypto industry's efforts to advance the Digital Asset Market Clarity Act have stalled due to disagreements over stablecoin yields. Bankers claim that these yields pose a threat to bank deposits, contradicting a recent White House report.
The American Bankers Association asserts that the White House economists analyzed the wrong scenario, focusing on the consequences of banning stablecoin yields rather than allowing them. The ABA economists argue that prohibiting yields on payment stablecoins is a necessary precaution to prevent them from becoming a risky substitute for insured bank deposits. This debate has hindered the progress of the Clarity Act, with senators from both parties expressing concerns that stablecoin yields could lure depositors away from banks.
A compromise has been proposed, banning yields on stablecoin holdings that resemble deposit accounts, but bankers 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, accelerating the migration of funds out of bank deposits, with larger institutions likely to benefit at the expense of community banks.