The US crypto industry's key legislative effort, the Digital Asset Market Clarity Act, has stalled due to disagreements over stablecoin yields. Bankers argue that these yields pose a significant threat to traditional bank deposits, contradicting a recent White House economic report. The American Bankers Association claims that the White House economists analyzed the wrong scenario, focusing on the effects of banning stablecoin yields instead of considering the consequences of allowing them.
According to the ABA, permitting stablecoin yields could lead to a significant migration of funds out of bank deposits and into stablecoins, ultimately threatening the stability of the banking system. This debate has been ongoing, with lawmakers attempting to find a compromise that addresses the concerns of both the banking and crypto industries. The longer the debate continues, the more challenging it will be to pass the Clarity Act, which aims to regulate the US crypto market.
The banking industry argues that the absence of intervention on stablecoin yields could lead to rapid growth in the stablecoin market, from $300 million to $2 trillion, and that this growth would be driven by yield-hungry investors, potentially destabilizing the banking system.