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Home/Markets & Investing/STABLECOIN US LEGISLATION · STABLECOIN REGULATION

Banking Lobby Holds Stablecoin Yield Rules Hostage to Deposit Flight

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Maeve Blackwood

stablecoin US legislation · Apr 17, 2026

Banking Lobby Holds Stablecoin Yield Rules Hostage to Deposit Flight

Source: DojiDoji Data Terminal

Stablecoin holders may be barred from earning annual percentage yield on idle balances as U.S. banks push to prevent deposits from fleeing traditional financial institutions. Senator Thom Tillis has delayed the release of legislative language on stablecoin returns within the Clarity Act, citing the need for further coordination with the banking industry and cryptocurrency firms.

Related Brief1d ago
cryptocurrency regulation

The fight over stablecoin yield is not about returns—it’s about where your money sits and who gets to lend it

Allowing yield on stablecoins doesn’t just change returns—it changes where your money lives and who profits from lending it. That’s the core of the standoff behind the stalled crypto market structure bill, not investor returns or regulatory clarity alone. President Trump signed the GENIUS Act last July, creating a federal framework for payment stablecoins—but it left one question open: can third parties offer yield on them? The answer determines whether stablecoin issuers, fintechs, or banks get to deploy the underlying cash. Banks say yes would trigger deposit flight. The White House Council of Economic Advisers estimates the effect differently: banning yield would increase bank lending by $2.1 billion, or 0.02%, under its baseline model. That narrow gain underscores what’s really at stake—control over trillions in float. Senators Angela Alsobrooks and Thom Tillis have reached a bipartisan agreement in principle that permits yield, drawing broad support from the crypto industry. But the Independent Community Bankers of America warns that allowing yield would damage locally based economic growth, a line of defense rooted in the role community banks play outside major financial centers. The Senate Banking Committee canceled a January markup after Coinbase pulled support from the draft. The Senate Agriculture Committee moved its portion forward but lacked Democratic votes. Now, the White House is pushing hard for passage, with Treasury Secretary Scott Bessent urging Republicans to act. Yet the path remains blocked—not by lack of compromise, but by competing visions of financial control. The final bill’s passage hinges on whether senators prioritize innovation over community bank stability.

The dispute centers on a gap left by the Genius Act, which banned stablecoin issuers from directly paying interest but failed to restrict returns provided through third-party platforms such as exchanges. Banks argue that closing this gap by allowing stablecoin interest would disrupt the financial system by drawing funds away from bank deposits. Cryptocurrency firms, including Coinbase, argue that banning rewards on idle balances stifles innovation.

Related Brief19h ago
stablecoins

A new liquidity layer bypasses Asia’s fragmented banking system to enable instant USDT settlements

High-volume transactions across Asia can now settle instantly in USDT without touching the region’s traditional banking system. The shift comes through a new liquidity layer built by Stables in partnership with Mansa, designed to bypass the fact that only 1% of local banks in a region handling 60% of global stablecoin flows support the technology. The gap has long constrained fintechs and developers across 150 local currencies. Mansa supplies the short-term liquidity that keeps Stables’ fiat-USDT corridors active, drawing on its track record of processing $394 million across more than 40 currency pairs since August 2024. Stables routes over $1.5 billion in annualized payment volume through a single API that bundles compliance, banking, and settlement—fully managing identity verification, sanctions screening, and travel rule obligations. The firm is licensed in Australia, Europe, and Canada. The partnership enables seamless cross-border value transfer in a region where banking fragmentation has until now forced reliance on slow or incomplete rails.

The current draft of the Clarity Act maintains a ban on rewards for idle balances while permitting returns tied to specific activities, such as transactions. Senator Tillis and Senator Angela Alsobrooks are coordinating the wording to resolve these conflicting positions. The final language will determine if stablecoin holders can receive APY on idle balances.

Related Brief1d ago
regulatory compliance

Cryptoasset rules set for October 2027 will require UK-targeted offshore firms to comply or exit

Firms that serve UK consumers with cryptoasset services will have to comply with new regulatory rules by October 2027 or exit the market. The Financial Conduct Authority’s latest consultation clarifies that offshore companies engaging in activities like stablecoin issuance, crypto trading platform operations, custody, and staking must fall within the UK’s regulatory perimeter if they involve UK-based users. The normal Overseas Persons Exclusion, which typically shields non-UK firms from domestic rules, does not apply to these activities. Even firms dealing with UK institutions must assess whether their operations are deemed to be in the UK. The regime, which takes effect in October 2027, will require applications by 30 September 2026, with final rules expected shortly before then. The FCA has already begun a pre-application support service to guide potential applicants. Entities not compliant by the deadline will no longer be able to legally offer these services to UK retail investors.

stablecoin US legislationstablecoin regulationcrypto money laundering enforcementcrypto IRS ruling

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