The US crypto industry's main legislative push, the Digital Asset Market Clarity Act, remains stalled due to disagreements over stablecoin yields, which bankers claim pose a threat to their deposits. In a rebuttal to a White House report downplaying these risks, the American Bankers Association argues that economists are focusing on the wrong scenario. Instead of analyzing the effects of banning stablecoin yields, they should consider the consequences of allowing such returns.
According to the ABA, this approach ignores the core risk and the potential for stablecoins to become a risky substitute for insured bank deposits. The dispute has delayed Senate legislation for months, with lawmakers attempting to find a compromise that would ban yield on stablecoin holdings resembling deposit accounts and only permit rewards programs for activity.
However, bankers remain unconvinced, warning that failing to intervene in stablecoin yields could lead to a rapid expansion of the market, accelerating the migration of funds out of bank deposits. The ABA suggests that leading stablecoin issuers would likely deposit their reserves in larger banks, bypassing community banks. As the debate continues, the prospects for the Clarity Act's passage become increasingly uncertain.