The US crypto industry's main policy effort, the Digital Asset Market Clarity Act, has been stalled due to disagreements over stablecoin yield, which bankers claim poses a risk to bank deposits. In response to a White House report downplaying the threat, the American Bankers Association asserts that the economists analyzed the wrong scenario, focusing on the consequences of banning stablecoin yield rather than allowing it.
The ABA economists argue that prohibiting yield on payment stablecoins is a necessary precaution, as it would prevent stablecoins from becoming a risky substitute for insured bank deposits. This debate has been ongoing, with senators from both parties previously moved by bankers' concerns that depositors would abandon traditional banks for higher-yielding stablecoins. A compromise was proposed to ban yield on stablecoin holdings resembling deposit accounts, but the banks remain unsatisfied.
The longer the debate continues, the more challenging it will be to pass the Clarity Act. Bankers warn that failing to intervene in stablecoin yield could lead to a rapid scaling of stablecoin markets, accelerating the migration of funds out of bank deposits, with larger institutions likely to benefit at the expense of community banks.