The advancement of the Digital Asset Market Clarity Act in U.S. policy has been impeded by disagreements over stablecoin yields, which bankers argue could jeopardize bank deposits if left unregulated. In a rebuttal to a White House economists' report downplaying the risks associated with stablecoin growth, the American Bankers Association asserts that the wrong scenario was examined.

Instead of assessing the implications of banning stablecoin yields, the focus should be on the consequences of permitting such returns. According to the ABA economists, 'The CEA paper underestimates the core risk by posing the wrong question.' They emphasize that prohibiting yield on payment stablecoins is a prudent measure, allowing stablecoins to evolve as a payment innovation rather than a risky substitute for insured bank deposits.

This stalemate, which was partially addressed in the Guiding and Establishing National Innovation for U.S. Stablecoins Act last year, has effectively stalled Senate legislation for months. Although lawmakers supporting the Clarity Act predict it could receive a Senate Banking Committee hearing by the end of the month, no session has been scheduled yet. The conflict centers on the potential for depositors to abandon banks in favor of higher stablecoin yields, prompting lawmakers to propose a compromise banning yield on stablecoin holdings that resemble deposit accounts and only permitting rewards programs for activities similar to credit-card rewards.

However, banks have not endorsed this compromise. As the debate prolongs, the challenge of passing the Clarity Act through the Senate process intensifies.

While crypto insiders have been vocal about the clash, bank representatives have been more restrained. The bankers' latest arguments suggest that inaction on stablecoin yield could lead to rapid market growth from $300 million to $2 trillion, with yield becoming a key feature that accelerates the migration out of bank deposits. They also argue that leading stablecoin issuers would likely deposit reserves in larger banks, bypassing community banks.