The US crypto industry's efforts to pass the Digital Asset Market Clarity Act have stalled due to concerns over stablecoin yield. Bankers argue that allowing stablecoins to offer yield could lure depositors away from traditional banks, while the White House claims this risk is overstated. The American Bankers Association has released a study contending that the White House economists analyzed the wrong scenario and ignored the potential dangers of stablecoin yield.
The dispute centers on whether stablecoin yield should be prohibited or allowed, with bankers warning that it could lead to a significant migration of deposits out of banks and into stablecoin markets. The Digital Asset Market Clarity Act aims to regulate US crypto markets, but its progress has been hindered by this debate.
Senators have proposed a compromise that would ban yield on stablecoin holdings that resemble deposit accounts, but bankers remain unconvinced. The longer the debate continues, the more challenging it will be to pass the Clarity Act.
Bankers argue that without intervention, stablecoin markets could rapidly expand from $300 million to $2 trillion, with yield becoming a major driver of growth and potentially destabilizing traditional banking.