The US crypto industry's main policy effort, the Digital Asset Market Clarity Act, remains stalled due to disagreements over stablecoin yields, which bankers claim pose a threat to bank deposits. In response to a White House report downplaying the risks, the American Bankers Association argues that the economists focused on the wrong scenario, analyzing the effects of a ban on stablecoin yields instead of considering what would happen if such yields were allowed. The ABA economists state, 'The CEA paper minimizes the core risk by starting from the wrong question.' They believe a ban on yield for payment stablecoins is a necessary precaution to prevent them from becoming a risky substitute for insured bank deposits.
This debate has been ongoing, with lawmakers attempting to find a compromise that would ban yield on stablecoin holdings resembling deposit accounts and only permit rewards programs for activities similar to credit-card rewards. However, the banks have not endorsed this proposal.
The longer the debate continues, the more challenging it will be to pass the Clarity Act through the Senate. The bankers argue that without intervention, stablecoin markets could rapidly expand from $300 million to $2 trillion, with yield becoming a key feature that accelerates the migration of funds out of bank deposits.