The U.S. crypto industry's push for regulatory clarity, via the Digital Asset Market Clarity Act, remains stalled due to disagreements over stablecoin yields.
Bankers have fired back at a White House report downplaying the risks of stablecoin yields to bank deposits, asserting that the wrong scenario was considered. The American Bankers Association argues that the Council of Economic Advisers should have examined the consequences of allowing stablecoin yields instead of banning them. ABA economists stated, 'The CEA paper minimizes the core risk by starting from the wrong question.' They believe that prohibiting yield on payment stablecoins is a necessary precaution to prevent them from becoming a risky substitute for insured bank deposits.
This dispute has effectively derailed Senate legislation for months, with lawmakers from both parties previously swayed by bankers' concerns that depositors would abandon traditional banks for higher stablecoin yields. A compromise was proposed to ban yield on stablecoin holdings resembling deposit accounts and only permit rewards programs for activity. However, banks have not endorsed this solution. As the debate prolongs, the likelihood of the Clarity Act passing through the Senate process diminishes.
Crypto insiders have been vocal about the issue, while bank representatives have been more restrained. The bankers' latest argument suggests that failing to intervene in stablecoin yields now could lead to rapid market growth, from $300 million to $2 trillion, with yield becoming a key driver of migration out of bank deposits. According to the ABA, leading stablecoin issuers would likely deposit reserves in larger banks, bypassing community banks.