Stablecoin yield dispute halts Digital Asset Market Clarity Act progress

The Senate Banking Committee has not yet scheduled a hearing for the Digital Asset Market Clarity Act, delaying legislation that would regulate U.S. crypto markets. The delay is driven by a dispute over whether stablecoin holdings can offer yield.

Bankers argue that if stablecoin yields outpace bank interest, depositors will move funds out of bank accounts in droves. The American Bankers Association (ABA) contends that such a migration would shift deposits from community banks toward larger institutions or stablecoin issuer accounts, shrinking credit availability for sectors that rely on relationship banking. The ABA suggests the stablecoin market could scale from $300 million to $2 trillion if intervention on yield is not implemented.

This position clashes with a report from the White House Council of Economic Advisers (CEA), which argues that stablecoin yield does not harm banks and that banning it would hurt consumers' ability to generate value. The ABA responded that the CEA analyzed the wrong scenario by failing to examine the impact if returns from stablecoins were allowed.

Lawmakers previously attempted a compromise that would ban yield on stablecoin holdings that resemble deposit accounts while allowing rewards programs for activity. The dispute has derailed the Senate legislation for months.