TL; DR: Eight major US banking groups have asked the Senate to limit stablecoin rewards before the vote on the Clarity Act. They argue that these incentives threaten the liquidity of the traditional financial system. Meanwhile, the crypto industry defends innovation and warns that excessive restrictions could drive technological development to other jurisdictions.
Banking pressure on stablecoin rewards
Major Wall Street banking associations have intensified their lobbying efforts ahead of the upcoming vote on digital asset legislation in the U.S. Senate. In a joint letter, representatives of the traditional financial sector expressed their deep concern about the rates of return and rewards offered by stablecoin issuers and platforms.
According to traditional banks, allowing stablecoin holders to earn competitive returns could trigger a massive run on bank deposits, making commercial and residential loans more expensive. Banks argue that these stable digital currencies should be strictly limited to payment and exchange functions, and should not operate as savings products not insured by the federal government.
The stance of the crypto sector
On the other hand, proponents of decentralized finance and stablecoin issuers point out that the rewards simply reflect the performance of the underlying Treasury bonds that back the reserves of these digital assets. Artificially limiting these returns would protect traditional banks at the expense of direct profitability for end users, negatively impacting financial inclusion.
The legislative outcome surrounding the Clarity Act will set a crucial precedent for the global digital asset ecosystem, defining the balance between protecting the traditional banking system and fostering innovation in digital payments.
Investing in cryptoassets is not fully regulated, may not be suitable for retail investors due to high volatility and there is a risk of losing all invested amounts.
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