US Senator Thom Tillis called the current version of the CLARITY Act a compromise between banks and the crypto industry and gives the bill a chance to pass with bipartisan support.
The largest US banking associations meanwhile stated that they are still dissatisfied with the new wording of the law regarding stablecoin yields. In their opinion, the law still poorly protects bank deposits.
In a joint statement, the American Bankers Association, Bank Policy Institute, Consumer Bankers Association, Financial Services Forum, and Independent Community Bankers of America acknowledged that Senators Thom Tillis and Angela Alsobrooks are trying to carefully address the issue of stablecoin yields.
However, banks believe that the current version of the text does not achieve this goal.
“It is important for Congress not to make a mistake with this decision,” the banking organizations said in their statement.
Due to disputes over stablecoin yields, the law has not been able to move forward properly for several months. The bill passed the House of Representatives in July by a vote of 294 to 134, and now there is increasing talk that it may simply not be adopted before the elections.
Previously, banking groups cited studies showing that if stablecoins become widespread, banks could lose trillions of dollars in deposits.
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This could hit small regional banks the hardest, as they may not have enough resources to compensate for such an outflow without more expensive borrowing sources.
In the new statement, banks also referred to a study by economist Andrew Negrinis, who studied at Stanford. According to his estimate, if stablecoin yields start actively pulling funds from deposits, the volume of lending to consumers, small businesses, and farmers could decrease by more than 20%.
At the same time, White House economists stated back in April that banning stablecoin yields could increase bank lending by only $2.1 billion, which corresponds to an increase of about 0.02%.
Banks Demand to Close the ‘Loophole’ in the Law
The main complaints from banks concern section 404 in the current version of the CLARITY Act. According to financial organizations, the current text essentially allows crypto platforms to pay users yields bypassing traditional banking restrictions.
Banking associations call this a serious loophole and say it must be closed.
They also reported that in the coming days they will submit their proposals to lawmakers to tighten the bill’s text.
At the same time, Thom Tillis believes that the current version of the CLARITY Act actually reflects a compromise. According to him, the law prohibits paying yields on “passive” stablecoin balances, but still allows crypto companies to offer users other forms of rewards.
Tillis also emphasized that the main task now is not to break bipartisan support for the law and finally give the market at least some clarity on the rules.
According to him, part of the banking sector may not be interested in either the development of the crypto industry or the emergence of such clarity.
The current version of the CLARITY Act was published on Friday. After that, Coinbase and other representatives of the crypto industry began actively pushing for the bill to be considered in the Senate as early as next week.
