The US crypto industry's key legislative effort, the Digital Asset Market Clarity Act, remains stalled due to disagreements over stablecoin yields. Bankers have reignited the debate, claiming that the industry's reward programs pose a threat to bank deposits.
In response to a White House report downplaying the risks, the American Bankers Association argues that the administration's economists are analyzing the situation from the wrong perspective. The ABA contends that allowing stablecoin yields could lead to a significant migration of funds out of bank deposits, ultimately destabilizing the banking system. This dispute has hindered the progress of the Clarity Act, which aims to regulate the US crypto market. Lawmakers had proposed a compromise to ban yield on stablecoin holdings that resemble deposit accounts, but the banking industry remains unsatisfied.
As the debate continues, the likelihood of the Clarity Act passing through the Senate process diminishes. The American Bankers Association warns that failing to intervene in stablecoin yields could lead to a rapid expansion of the stablecoin market, potentially reaching $2 trillion, and further exacerbating the risks to bank deposits.