The US crypto industry's main legislative effort, the Digital Asset Market Clarity Act, has stalled due to disagreements over stablecoin yields. Bankers argue that these yields pose a threat to bank deposits, contradicting a recent White House economists' report. The American Bankers Association claims that the White House economists analyzed the wrong scenario, focusing on the impact of banning stablecoin yields rather than allowing them.
The ABA argues that permitting stablecoin yields would lead to a significant migration of funds from bank deposits to stablecoins, ultimately threatening the stability of the banking system. This dispute has hindered the progress of the Clarity Act, which aims to regulate the US crypto market.
Lawmakers had proposed a compromise to ban yields on stablecoin holdings that resemble deposit accounts, but bankers remain unconvinced. The debate is ongoing, with senators from both parties weighing in on the issue. The longer the debate continues, the more challenging it will be to pass the Clarity Act. The bankers' latest arguments suggest that the absence of intervention on stablecoin yields could lead to a rapid scaling of the stablecoin market, from $300 million to $2 trillion, and accelerate the migration of funds out of bank deposits.