The US crypto industry's efforts to advance the Digital Asset Market Clarity Act have been hindered by a contentious issue surrounding stablecoin yield. Bankers have countered a recent White House report, arguing that the economists' analysis was flawed.
The American Bankers Association asserts that the Council of Economic Advisers examined the wrong scenario, focusing on the effects of banning stablecoin yield rather than the consequences of allowing it. The ABA economists argue that prohibiting yield on payment stablecoins is a necessary precaution to prevent them from becoming a risky substitute for insured bank deposits.
This debate has stalled the Senate legislation, 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 impeded by the stablecoin yield issue. The bankers warn that failing to intervene could lead to a rapid expansion of stablecoin markets, potentially endangering bank deposits. They contend that yield would become a key driver of migration out of bank deposits in a larger market, with leading stablecoin issuers likely to deposit reserves in larger institutions rather than community banks.