The US crypto industry's main legislative effort, the Digital Asset Market Clarity Act, remains stalled due to disagreements over stablecoin yields, which bankers claim pose a threat to traditional bank deposits. In a rebuttal to a White House report downplaying the risks, the American Bankers Association asserts that the economists misunderstood the potential consequences of allowing stablecoin yields. The ABA economists argue that the White House report 'minimizes the core risk by starting from the wrong question' and that prohibiting yield on payment stablecoins is necessary to prevent them from becoming a risky substitute for insured bank deposits. This dispute has delayed the Senate legislation, with lawmakers attempting to find a compromise that would ban yield on stablecoin holdings resembling deposit accounts and only permit rewards programs for specific activities.
However, the banking industry remains unconvinced, warning that failing to intervene in stablecoin yields could lead to a rapid scaling of stablecoin markets, potentially accelerating the migration of funds out of traditional bank deposits. The ABA suggests that in a larger market, yield would become a key driver of this migration, with leading stablecoin issuers likely to deposit their reserves in larger banks rather than community banks.