Crypto market infrastructure legislation continues to meander through the US Senate as stakeholders struggle to reach an agreement on the bill’s final language. The Clarity Act, which passed the House last year, has struggled to gain traction in the Senate, as the legacy banking industry fears losing revenue to innovation. The most significant hurdle is whether stablecoin holders can earn interest or generate yield – something legacy banks do not want.
The entire saga is a disappointing reflection on the legislative process: while the path to approval should be relatively clear, special interests (old banks) are stymying progress due to looming competition.
Yesterday, crypto journalist Eleanor Terret shared that a discussion with Ohio Senator Bernie Moreno indicated the bill should be “done” by May. Moreno had previously worried that if the CLARITY Act was not approved by May, it could fall off the calendar as midterms loom. Moreno also called bank objections “fake,” telling them to “get going with innovation.”
Senator Moreno has a good understanding of the digital asset ecosystem, as, prior to his election, he was involved with blockchain-based startups in his home state.
While the banks have foisted unsubstantiated concerns that stablecoins could undermine the industry’s ability to originate loans, the most disappointing aspect of the discussion is the inability of elected officials to show some leadership and ignore the banking industry’s illegitimate protests. Banks can compete, too, and the entire financial services sector will benefit from a forward-looking policy that supports innovation and consumers and businesses alike.
Additionally, incorporating stablecoin yield into the digital dollar will make the greenback an unassailable reserve currency, as the global population would rush to hold the digital asset while driving US Treasury purchases. All of this is good for the country.
