The US crypto industry's efforts to pass the Digital Asset Market Clarity Act have been hindered by a contentious point regarding stablecoin yields, which bankers claim poses a risk to bank deposits. In response to a White House report downplaying the threat of stablecoins to traditional banking, the American Bankers Association argues that the administration's economists are examining the wrong scenario.
The ABA contends that the real concern is what would happen if stablecoin yields were allowed to continue, rather than if they were banned. According to the ABA, the White House's analysis 'minimizes the core risk by starting from the wrong question.' The dispute over stablecoin yields has stalled the Senate's consideration of the Clarity Act, with lawmakers attempting to find a compromise between the banking industry's concerns and the crypto industry's desire for regulatory clarity. The bankers argue that if stablecoin yields are not addressed, depositors may flee traditional banks in search of higher returns, leading to a rapid scaling of the stablecoin market from $300 million to as much as $2 trillion. This, in turn, could accelerate the migration of funds out of bank deposits, potentially destabilizing the banking system.