The US crypto industry's key legislative effort, the Digital Asset Market Clarity Act, remains stalled due to disagreements over stablecoin yields. Bankers have reignited the debate, arguing that reward programs associated with stablecoins pose a threat to bank deposits. In response to a White House report downplaying the risks, the American Bankers Association claims that the economists analyzed the wrong scenario, focusing on the impact of banning stablecoin yields rather than allowing them. The ABA asserts that prohibiting yield on payment stablecoins is a necessary safeguard, enabling stablecoins to develop as a payments innovation rather than a risky substitute for insured bank deposits.
This dispute has hindered the Senate legislation for months, with lawmakers attempting to find a compromise that addresses the bankers' concerns. The proposed Clarity Act aims to regulate US crypto markets, but its progress has been slow. The longer the debate continues, the more challenging it will be to pass the bill. The bankers warn that without intervention, the stablecoin market could rapidly expand, leading to a significant migration of funds out of bank deposits.