The Digital Asset Market Clarity Act bill, which aims to regulate cryptocurrency markets in the USA, continues to be pending, especially due to the dispute over stablecoin returns. This detail, which is outside the basic efforts towards regulation, has blocked the process along with the concerns of the banks.
Stablecoin yield creates tension in the banking industry
In the recent report prepared by White House economists, it was evaluated that stablecoins do not pose a major threat to the banking sector. On the other hand, the US Bankers Association (ABA) argued that the report analyzed the wrong scenario.
Economists of the association state that the White House is only considering the ban on stablecoin returns, and that the real risk will arise if the returns are released.
ABA economists said, “The CEA report starts from the wrong point. A yield ban on stablecoins for payment purposes would be a reasonable measure. Such a step could mature stablecoins as an innovative payment instrument, but would prevent them from being a risk-free deposit alternative.”
This area, which was partially regulated by the GENIUS Act prepared last year, was kept on the Senate agenda for months due to incomplete points. Although the current Clarity Act bill is expected to be discussed in the Senate Banking Committee by the end of the month, the session schedule has not been clarified so far.
The consensus on the yield ban was met with different reactions in the sector
Both Democratic and Republican Senators argued that a limit should be placed on stablecoin yields, drawing attention to banks’ concerns about “deposit flight”. As a solution to this, it was envisaged to allow reward programs based on certain activities, similar to credit card rewards, but to ban direct returns in accounts similar to deposits.
Banks, on the other hand, have not yet fully supported the compromise. In particular, some bankers think that even stablecoin-based rewards programs could accelerate deposit churn. This concern was echoed in the ABA’s recent statements.
Cynthia Lummis, who chairs the digital assets subcommittee of the Senate Banking Committee, shared the message “America needs clarity” in her post on her social media account. Over the weekend, he pointed out that the law was at the “now or never” stage.
The longer it takes for the Clarity Act to be put to vote, the more difficult it becomes for it to become law. While there are more vocal posts in favor of the law in the crypto sector, a more cautious approach is noticeable in the banking wing.
In the bankers’ latest statements, the warning that the sector could grow from $300 million to $2 trillion if stablecoin returns are not intervened now was brought to the agenda.
According to the ABA’s assessment, in a large consistent market the return function may cease to be a mere feature and become the key factor that accelerates mass exits from the banking system.
Stablecoin reserves will still be kept in the banking system on a demand basis, but it is expected that these deposits will mainly be directed to large banks, while local and small-scale banks will remain at a disadvantage.
