The US crypto industry's efforts to pass the Digital Asset Market Clarity Act have been hindered by a debate over stablecoin yield, with bankers arguing that it could lead to a mass exodus of depositors from traditional banks. In response to a White House report downplaying the risks, the American Bankers Association has countered that the administration is analyzing the issue from the wrong angle.
Instead of focusing on the effects of a ban on stablecoin yield, the ABA argues that policymakers should consider the potential consequences of allowing such yields to continue. According to the ABA, the White House's approach 'minimizes the core risk by starting from the wrong question.' The dispute has stalled the Senate's consideration of the Clarity Act, which aims to regulate the US crypto market.
Lawmakers had attempted to find a compromise by proposing a ban on yield for stablecoin holdings that resemble deposit accounts, but the banking industry remains unsatisfied. The longer the debate drags on, the more challenging it will be to pass the Clarity Act.
The American Bankers Association warns that without intervention, the stablecoin market could balloon from $300 million to $2 trillion, with yield becoming a key driver of growth and potentially accelerating the migration of deposits out of traditional banks.