Digital Chamber, known for its advocacy activities in the cryptocurrency industry, called on the US Congress to take action to protect the ability of stablecoins for payment purposes to provide returns. In their latest proposal, it was suggested that current draft laws could hinder the basic functioning of the decentralized finance (DeFi) ecosystem.
The Future of Stablecoin Returns is Discussed
Digital Chamber stated that some exemptions planned in Article 404 of the CLARITY Act, which is in the draft phase, should be preserved. These provisions distinguish between the classical interest paid by banks on insured deposits and the returns obtained from liquidity provision activities in decentralized exchanges. In other words, the rewards obtained by stablecoin users on DeFi platforms are not considered as ordinary banking interest.
Attention was drawn to the risks in the Bill
In the statement made by the group, it was stated that the removal of these exemptions would not only disrupt innovation within the USA but also weaken the effectiveness of the American dollar in the digital economy. Digital Chamber is of the view that if US-regulated stablecoins are banned from accessing DeFi markets, capital could shift to international markets or unregulated foreign digital assets. Such a development carries a risk that could reduce dollar demand within the digital economy.
Digital Chamber argued that a complete ban on returns would lead users to passive retention strategies, which could lead to financial losses due to sudden price changes in liquidity pools.
Additionally, it was pointed out that if the returns are removed, users may face more risks known as “impermanent loss”, especially those associated with liquidity pools.
Seeking Middle Ground for Regulatory Harmony
On the other hand, the banking lobby in the USA warned that stablecoins offering returns without the capital conditions that banks must meet could cause imbalance in the financial system. Lobby representatives claimed that high-yield stablecoins could drain liquidity from community banks, undermining stability.
In the face of these criticisms, the Digital Chamber suggested that comprehensive consumer information be obliged to ensure that stablecoins offering returns are not confused with bank interest. He also recommended conducting a “Deposit Impact” study at the federal level two years after the law comes into effect. It was argued that this research would reveal the finding that stablecoins support the traditional financial sector.
All these developments are taking place at a time when negotiations for a comprehensive market structure law within the scope of the CLARITY Act have entered a critical turning point. While it was reported that an agreement could not be reached between the banking sector and crypto industry representatives at a meeting held at the White House at the beginning of the week, Wall Street circles continue their stance against stablecoin issuers being able to offer direct returns to customers. The industry considers such products as a direct threat to the traditional deposit system.
