In the US, senators are seeking a new compromise to overcome the impasse surrounding the Clarity Act, one of the key legislative bills aimed at regulating the cryptocurrency market. At the heart of the debate are the reward and yield practices offered to stablecoin users.
The US banking sector had effectively halted the bill’s progress, arguing that stablecoin rewards could pose serious competition to traditional bank deposits. However, senators are continuing discussions to find a middle ground between the banking sector and the crypto industry.
Maryland Democratic Senator Angela Alsobrooks, speaking at the American Bankers Association summit in Washington, said that the ongoing negotiations would not fully satisfy either side, but that the goal was to achieve a balance. Alsobrooks stated that she and North Carolina Republican Senator Thom Tillis were working on a solution that would pave the way for the long-delayed Senate Banking Committee hearing.
Alsobrooks stated that the proposed compromise would include safeguards to limit the “deposit flight” risk cited by banks, while also allowing for the development of financial innovation. Banks argue that the rewards given for stablecoin balances create a structure similar to deposit interest, which could lead consumers to withdraw money from banks.
The senator stated that protective regulations were necessary to prevent these risks, but also acknowledged that some compromises would be unavoidable in order to make progress.
The proposed compromise plan reportedly focuses on allowing customer rewards by crypto platforms only within a specific and narrower area of stablecoin activity.
The banking sector, however, is calling for stricter restrictions, citing existing regulations. Rob Nichols, president of the American Bankers Association, pointed out that under the GENIUS Act, passed last year, organizations issuing payment stablecoins are prohibited from paying interest to attract customers, and argued that crypto exchanges and related companies should also be subject to the same restrictions.
*This is not investment advice.
