The US crypto industry's key legislative effort, the Digital Asset Market Clarity Act, remains stalled due to disagreements over stablecoin yields. Bankers have reignited the debate, claiming that stablecoin reward programs pose a threat to bank deposits. In response to a White House report downplaying the risks, the American Bankers Association argues that the economists analyzed the wrong scenario.
Instead of considering a ban on stablecoin yields, they should have examined the consequences of allowing such returns. The ABA economists stated, 'The CEA paper minimizes the core risk by starting from the wrong question.' This dispute has delayed Senate legislation for months, with lawmakers attempting to find a compromise. The proposed ban on yield for stablecoin holdings that resemble deposit accounts has not been well-received by banks. Senator Cynthia Lummis, chair of the Banking Committee's digital assets subcommittee, has called for action, saying 'America needs Clarity.' The prolonged debate makes it increasingly challenging to pass the Clarity Act.
Bank representatives have argued that failing to intervene in stablecoin yields could lead to rapid market growth, accelerating the migration of funds out of bank deposits. According to the ABA, leading stablecoin issuers would likely deposit reserves in larger banks, bypassing community banks.