In the United States, the Digital Asset Market Clarity Act—legislation intended to regulate cryptocurrency markets—remains stalled, primarily due to disagreements over stablecoin yields. This specific issue, falling outside the main scope of digital asset regulation efforts, has become a key sticking point as banks express heightened concerns.
Stablecoin returns stir tensions in banking sector
A recent report by White House economists concluded that stablecoins do not pose a major threat to the banking industry. However, the American Bankers Association (ABA) rejected the report, arguing that its analysis relied on unrealistic assumptions.
According to ABA economists, the White House considered only scenarios in which stablecoin returns are prohibited, while they believe the true risk emerges if such yields are allowed.
ABA economists stated that the CEA report starts from the wrong premise. They argued that a ban on yield for payment stablecoins would be a reasonable precaution. Such a step could help stablecoins mature as innovative payment tools, but it would also prevent them from becoming risk-free deposit alternatives.
Last year’s GENIUS Act provided a partial regulatory framework for stablecoins, but gaps remain and have kept the current bill on the Senate agenda for months. Although the Clarity Act was expected to go before the Senate Banking Committee by the end of the month, no date has been confirmed.
Calls for yield ban face mixed reactions from industry
Both Democratic and Republican senators have emphasized the risk of “deposit flight” from traditional banks, arguing that limits on stablecoin yields are necessary. As a compromise, lawmakers proposed permitting only certain rewards tied to activities—similar to credit card points—while banning direct yields for deposit-like stablecoin accounts.
Despite these efforts, the banking sector has yet to fully endorse the compromise. Some bankers remain concerned that even stablecoin-based reward programs could accelerate deposit outflows. This apprehension has been echoed in the ABA’s recent statements.
Senator Cynthia Lummis, who chairs the Senate Banking Committee’s digital assets subcommittee, posted on social media that “America needs clarity,” underlining the urgency of the legislation. Over the weekend, she warned that the bill is now in a “now or never” phase.
The longer it takes for the Clarity Act to reach a vote, the less likely it is to be enacted, advocates argue. Calls in favor of the bill are growing louder within the crypto industry, while the banking lobby urges greater caution.
Recent statements from bankers have cautioned that failure to act now could allow the stablecoin sector to balloon from $300 million to $2 trillion in value.
According to the ABA, in a large-scale market, yield features would no longer be a simple aspect of stablecoins, but become a major driver of mass withdrawals from the traditional banking system.
Stablecoin reserves are likely to remain in the banking system as demand deposits, but analysts warn that these funds will mostly flow to the largest banks, leaving small and community banks at a disadvantage.
