Allowing stablecoin yield in the CLARITY Act, the crypto market infrastructure legislation, appears to be an issue the banking industry is willing to die on. Legacy banks worry that profits will decline as deposit holders move their funds to more agile stablecoins that offer yields higher than those offered by banks today. Of course, if a ban on stablecoin yield sticks, it means policymakers are harming consumers to benefit big banks on a spurious argument. Banks already face deposit competition and are more than capable of competing with stablecoin issuers. Bank lobbyists have been effectively arguing their side by leveraging uncertainty without any proof.
Cryptio CEO Antoine Scalia notes that, currently, stablecoin yield is mostly banned in the GENIUS Act (stablecoin law) and the current language in the Senate’s version of the CLARITY Act.
Scalia believes that the recent debate over stablecoin yield may indicate that the stance is shifting back toward being more pro-yield. He does not think it’s likely that a direct-issuer stablecoin will be allowed to offer yield, but they do think third parties could be a workaround.
“What we’re seeing in the CLARITY debate is a shift from a purely risk-driven approach toward a more balanced focus on market structure and dollar competitiveness. There’s growing recognition that overly restrictive rules on stablecoin incentives could push liquidity offshore without reducing risk,” says Scalia. “The reality is that digital dollar markets will continue to evolve incentive mechanisms, whether through yield, rewards, or liquidity provision. The key question for policymakers is not how to eliminate those dynamics, but how to ensure they remain transparent, auditable, and anchored within a regulated U.S. framework.”
In brief, stablecoin yield is good for the country and strengthens the dollar as the world’s reserve currency. Banks are taking a selfish approach here, and the sooner policymakers wake up to this fact, the better.