According to a report released this afternoon, consensus was reached on: CLARITY Act and stablecoin yield.
The CLARITY Act, or crypto market infrastructure legislation, has been delayed by the banking industry, fearing competition from the digital asset industry. Banks worry that if users hold stablecoins and earn interest or yield, it would undermine their traditional lending businesses, which rely on paying little or nothing for deposits and then lending the same funds at a much higher rate.
Accordingly Punchbowl NewsWhich one is first? clarified update, Senators Thom Tillis And Angela Aslobrooks We have agreed on language regarding stablecoin rewards. The bill now clarifies that digital asset firms can offer rewards tied to stablecoin assets, but there is a ban on the rewards offered.in a manner that is economically or functionally equivalent to the payment of interest or yield on an interest-bearing bank deposit.”
It looks like the legislation is ready to move to a markup. Senate Banking Committee and from there to a full Senate Vote. The bill is getting closer to heading to the White House for signature, as the House has already approved its own version of the legislation.
Although a compromise had been discussed for weeks, not all industry insiders were entirely happy with the faltering language, which was clearly a win for the legacy banks.
coinbase Chief Policy Officer Faryar Shirzad declared By saying it’s time to tackle CLARITY, we added a caveat that the discussion is based on imagined risk, not real evidence or a real understanding of how crypto actually works.
“In the end, banks were able to place more restrictions on rewards, but we preserved what was important: Americans’ ability to earn rewards based on actual use of crypto platforms and networks. We also ensured that the United States remained at the forefront of the financial system, which is crucial in this era of competitive geopolitics. This is important for innovation, consumers, and America’s national security. Now that we have that issue behind us, it is time to focus on the broader bill. As this debate continues, many note progress has been made in other areas such as token classification, DeFi, and tokenization.” We are excited to review the full text and move the bill forward.
While it is a win for legacy banks, which will always have the option to compete on a level playing field, there is an expectation that over time innovation and benefits to consumers will topple the moat established by financial firms fearful of change. This would effectively be a short-term win for the banking industry, which has always been good at using lobbying and regulation to stifle competition.
Perhaps the most disappointing aspect of the dispute was that policymakers sided with banks, not consumers.
A notice of the pricing hearing should be issued soon by the Senate Banking Committee.
