The US crypto industry's efforts to advance the Digital Asset Market Clarity Act have been hindered by disagreements over stablecoin yields, which bankers argue could lure depositors away from traditional banks. In response to a White House report downplaying the risks, the American Bankers Association claims that economists are focusing on the wrong scenario, and that allowing stablecoin yields could lead to a significant migration of funds out of bank deposits.
The bankers argue 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 stalled Senate legislation, including the Clarity Act, which aims to regulate US crypto markets.
Lawmakers had proposed a compromise banning yield on stablecoin holdings that resemble deposit accounts, but bankers remain unsatisfied. As the debate drags on, the prospects for the Clarity Act's passage become increasingly uncertain.
The American Bankers Association warns that without intervention, stablecoin markets could rapidly expand, leading to a significant shift of deposits away from traditional banks and into stablecoins, with potentially severe consequences for the banking sector.