Allowing stablecoin returns CLARITY ActCrypto market infrastructure legislation appears to be an issue the banking industry is ready to die on. Legacy banks worry that profits will decline as depositors shift their funds to more agile stablecoins that offer higher returns than banks offer today. Of course, the continued ban on stablecoin yields means that policymakers are harming consumers to benefit big banks under a false argument. Banks already face competition for deposits and have the ability to compete with stablecoin issuers. Bank lobbyists take advantage of uncertainty to effectively argue their side without any evidence.
encryption CEO Antoine Scalia He notes that currently stablecoin returns are mostly prohibited in the GENIUS Act (the stablecoin bill) and existing language in the Senate’s version of the CLARITY Act.
Scalia believes recent debates about stablecoin yield may indicate that attitudes are shifting toward being more pro-yield. He doesn’t think a directly issued stablecoin is likely to be allowed to offer yield, but thinks third parties could be a workaround.
“What we’re seeing in the CLARITY debate is a shift from a purely risk-focused approach to a more balanced focus on market structure and dollar competitiveness. There’s a growing awareness that overly restrictive rules on stablecoin incentives could push liquidity offshore without reducing risk,” Scalia says. “The reality is that digital dollar markets will continue to develop incentive mechanisms through the provision of returns, rewards or liquidity. The key question for policymakers is not how to eliminate these dynamics, but how to ensure that they remain transparent, auditable and regulated within the US framework.”
In short, stablecoin returns are good for the country and strengthen the dollar, the world’s reserve currency. Banks are taking a selfish approach to this issue, and the sooner policymakers realize this fact, the better.
