The US crypto industry's key legislative effort, the Digital Asset Market Clarity Act, remains stalled due to disagreements over stablecoin yields, which bankers argue poses a risk to traditional bank deposits. In response to a White House report downplaying the impact of stablecoins on banks, the American Bankers Association asserts that the Council of Economic Advisers examined the wrong scenario. Instead of analyzing the effects of a ban on stablecoin yields, they should have considered the consequences of allowing such yields.
The ABA economists argue that the White House report 'minimizes the core risk by starting from the wrong question' and that prohibiting yield on payment stablecoins is a necessary precaution to prevent them from becoming a risky substitute for insured bank deposits. This debate has delayed the Senate legislation for months, with lawmakers attempting to find a compromise that would ban yield on stablecoin holdings resembling deposit accounts and only permit rewards programs for activity. However, bankers remain unconvinced, warning that failing to intervene in stablecoin yields could lead to a rapid scaling of stablecoin markets from $300 million to $2 trillion, accelerating the migration of funds out of bank deposits.