The US crypto industry's key legislative effort, the Digital Asset Market Clarity Act, remains stalled due to disagreements over stablecoin yield. Bankers argue that the White House economists' recent report underestimated the risks, as it focused on the wrong scenario.
The American Bankers Association asserts that allowing stablecoin yield could lead to a significant migration of funds out of bank deposits, ultimately threatening the stability of the banking system. The conflict has delayed the Senate legislation, with lawmakers struggling to find a compromise.
The bankers' concerns center around the potential for stablecoin yield to outpace the interest rates offered by banks, leading to a loss of depositors. While a compromise has been proposed, banning yield on stablecoin holdings that resemble deposit accounts, the banking industry remains unsatisfied. The debate's prolongation makes it increasingly challenging to pass the Clarity Act, with crypto insiders and bank representatives holding differing views on the matter.
The bankers warn that inaction on stablecoin yield could result in rapid market growth, from $300 million to $2 trillion, and accelerate the migration of funds out of bank deposits.