The US crypto industry's efforts to pass the Digital Asset Market Clarity Act have been hindered by a dispute over stablecoin yields, which bankers argue could lure depositors away from traditional banks. In response to a White House report downplaying the risks, the American Bankers Association asserts that the administration's economists are focusing on the wrong issue.
The ABA economists argue that allowing stablecoin yields could lead to a massive migration of funds out of bank deposits, potentially destabilizing the banking system. The conflict has stalled the Senate legislation, with lawmakers struggling to find a compromise between the banking industry's concerns and the crypto industry's push for regulatory clarity. The longer the debate drags on, the more challenging it will be to pass the Clarity Act, which aims to regulate the US crypto market.
The bankers' latest salvo warns that failing to intervene in stablecoin yields could allow the market to balloon from $300 million to $2 trillion, with potentially disastrous consequences for community banks.