The US Congress has pushed the Clarity Act, a bill structuring the cryptocurrency market, into a crucial stage, but it has been stalled in the Senate for some time. The central point of contention is whether stablecoin issuers can offer "interest income." Banking groups argue that such a design would directly siphon deposits from traditional banks. In an effort to thwart the bill, the crypto industry has recently begun proactively offering concessions in an attempt to quell opposition from banks.
The House of Representatives is now facing a hurdle in the Senate, with stablecoin yields becoming the biggest point of contention.
The US House of Representatives has passed a bill related to cryptocurrency market structure, but negotiations in the Senate remain stalled. The core of the controversy centers on whether stablecoin issuers can offer returns to users. The banking industry argues that if stablecoins provide returns similar to deposit interest, they will siphon funds from the banking system, thereby impacting the stability of the traditional financial system, which is why the bill has failed to gain consensus in the Senate.
Cryptocurrency vendors are making concessions, bringing in community banks to bail them out.
According to a Bloomberg report citing anonymous sources, crypto industry players have recently begun proposing several concessions in hopes of helping stalled bills to be unfrozen in the Senate. These proposals include:
- Enabling community banks to play a more important role in the stablecoin system
- Stablecoin issuers are required to deposit their reserve assets in community banks.
- Assisting community banks in issuing stablecoins through partnerships
The intention behind these ideas is to reduce the banking industry's hostility towards stablecoins, making the banking system a part of the stablecoin ecosystem rather than excluding it.
The White House's failed negotiations have reignited the controversy surrounding the outflow of funds.
The White House convened talks with the crypto industry and banking groups on Monday, but the two sides failed to reach a consensus. Whether stablecoins can offer returns remains one of the most intractable points of contention. Senator Tim Scott, chairman of the Senate Banking Committee, told Fox News on Wednesday that he believes allowing crypto companies to offer reward mechanisms is a good thing in itself, but it shouldn't be misleading to the public into thinking these products are equivalent to bank deposits.
He also stated that "there will be no outflow of deposits," emphasizing that he will continue to communicate and coordinate with consumer banks, and that both sides remain at the negotiating table, hoping to overcome differences and promote the United States to become the center of the global crypto industry.
The two draft bills still need to be integrated, and further coordination between the two parties is still required.
In January of this year, the U.S. Senate Agriculture Committee released a Republican version of the Market Structure Bill draft, but it did not receive support from Democrats; after completing a clause-by-clause review on January 29, the bill passed the committee stage.
However, before it can be sent to Trump for signature into law, it still needs the support of at least seven Democratic senators in a full Senate vote. Meanwhile, the Senate Banking Committee has also proposed a more stringent version of the market structure draft. The two versions are not yet integrated and further coordination is needed for the bill to move forward.
This article, titled "The Clarity Act is Stuck, Industry Players Propose Allowing Community Banks to Issue Their Own Stablecoins as a Solution," first appeared on ABMedia, a ABMedia .
