The CLARITY Act, or crypto market infrastructure legislation, is parked in the Senate after being approved in the House, and is largely held up by whether stablecoin holders will benefit from yield (or interest payments).
As stablecoins must hold matching, low-risk assets like T-Bills, the yield generated could be shared with holders. And as many people still hold money in legacy bank savings accounts, which often yield little to no interest, banks are concerned about potential competition. While the answer to the old banks’ fear is obvious to all, they should step up and compete; the banking sector is exceptionally effective at lobbying.
Recently, reports have surfaced that a deal is in the works as the Trump administration grows irritated with the banking industry’s inability to adapt. The chatter is that a “limited yield” compromise is on the table, meaning passive interest is gone, but rewards could be generated from payments and transfers. The goal is to block the “deposit flight,” though there is no proof that this will definitely happen.
During the DC Blockchain Summit, Senator Tim Scott, Chairman of the Senate Banking Committee, said they have made progress on the language, and a proposal may be in his hands this week.
While there are other issues with the CLARITY Act, a stablecoin yield compromise acceptable to the crypto sector would be a big win for the legislation, which is likely to become law soon.