Banking industry associations are stepping up their lobbying campaign to oppose the stablecoin yield agreement in the CLARITY Act. These groups are now targeting several senators on the Banking Committee.
This move further intensifies the debate between banks and the White House over whether yield-bearing stablecoins will negatively impact traditional deposits.
The White House and banks are at odds over stablecoin yield data.
The Tillis-Alsobrooks agreement proposes banning passive interest payments on stablecoin balances, but still allows rewards based on specific activities. However, banking groups argue that this restrictive regulatory framework could also cause deposits to leave the traditional system.
The Consumer Bankers Association has hired economist Andrew Nigrinis to refute the April 8, 2024 report from the White House Council of Economic Advisors.
According to that analysis, banning stablecoin yields would only increase banks' lending capacity by an additional $2.1 billion. Furthermore, it is estimated that consumers would suffer a net loss of $800 million if stablecoin yields were banned.
The report, backed by the CBA, argues that this risk will increase as the stablecoin market surpasses $300 billion. The American Bankers Association has even warned that up to$6.6 trillion in deposits could "flow" out of the system . Reportedly, banking groups have begun lobbying additional senators beyond the main negotiating team.
Previously, the White House had criticized banks for obstructing stablecoin legislation .
Patrick Witt, executive director of the White House Presidential Advisory Committee on Digital Assets, dismissed this long-standing opposition.
"It's hard to explain why banks are still lobbying on this issue other than greed or ignorance. Stop it," he said .
Senator Tillis told reporters that his team was still “discussing back and forth” whether to release the agreement text this week.
Senator Alsobrooks said she “ may introduce it next week.” If the Banking Committee does not pass the bill in April 2024, the chances of it being passed in 2026 are very low.
