Digital Asset Market Structure Bill Adrift Due to Backlash from Traditional Banks
Stablecoins are inevitable competitors to bank deposits.
- Editor's note
- ※ Explanation of terms
Stablecoin: A cryptocurrency pegged 1:1 to fiat currencies like the US dollar or real assets like gold, minimizing price volatility. Representative examples include Tether (USDT) and USD Coin (USDC).
Digital Asset Market Structure Act (Clarity Act): US federal legislation to provide a clear regulatory framework for digital assets, including stablecoins.
Community Bank: A small, community-based bank that primarily provides lending services to local residents and small businesses.
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"I hope banks will embrace this trend instead of resisting it," Loomis said in an interview with Fox Business Channel host Maria Bartiromo on Tuesday, adding that stablecoins "will be a completely new financial product that banks can offer their customers."
Banks halt bill progress amid concerns about deposit outflows.
Negotiations surrounding the CLARITY Act, which regulates the structure of the virtual asset market, are currently at a standstill. Banks and credit unions are warning senators that stablecoin reward mechanisms could trigger capital outflows from traditional deposit accounts.
Concerns are being raised that community banks, which rely on stable deposits for local lending, will be particularly affected. The banking industry predicts that if stablecoins offer interest income, customers will withdraw their existing bank deposits en masse and transfer them to stablecoins.
Bill Delay Could Limit Cryptocurrency Price Rise
Nic Puckrin, a digital asset analyst and co-founder of Coin Bureau, said in an interview that the ongoing delay in the bill is a "real anti-climax," and that even before geopolitical instability factors in, the uncertainty is "putting a ceiling on digital asset prices."
He also said that stablecoins have "strategic significance" against the backdrop of a weak dollar, and that they are "a way to strengthen the dollar through the back door amid geopolitical and macroeconomic pressures."
Stablecoins Inevitably Compete with Bank Deposits
"Regardless of the outcome, stablecoins will undoubtedly continue to emerge as competitors to bank deposits," Perkrin said, adding that "short of a blanket ban on all forms of rewards, there is little that can stop this trend."
Congressman Loomis is known as a vocal supporter of Bitcoin and cryptocurrency regulation. He has spearheaded cryptocurrency-related legislation on the Senate Banking Committee and is working with the Treasury Department to promote tax incentives for Bitcoin.
The CLARITY Act, a long-awaited bill for the industry
The CLARITY Act is a market structure bill long sought by the cryptocurrency industry, aiming to provide a clear regulatory framework for digital assets.
This bill clarifies regulatory standards for the issuance and operation of stablecoins and establishes a regulatory framework for virtual asset exchanges and custody services.
However, with the Senate passage of the bill delayed due to opposition from traditional financial institutions, the cryptocurrency industry continues to face regulatory uncertainty. The industry argues that a clear regulatory framework is necessary for institutional capital to fully inflow.
Market experts predict that the passage of the CLARITY Act will be a key variable in the virtual asset market this year.
Joohoon Choi joohoon@blockstreet.co.kr
