March 5th news reports from Reuters indicate that negotiations over the CLARITY Act, aimed at establishing a comprehensive regulatory framework for digital assets in the United States, have reached a new deadlock. Banks have expressed opposition to the compromise proposal pushed by the White House, questioning whether the act can be passed this year. At the core of the stalemate are the terms concerning stablecoin yields. Banks oppose allowing stablecoin issuers and crypto companies to offer yield-bearing products, arguing that this would draw away bank deposits and impact their lending capacity. Crypto companies argue that they must be able to offer yields to attract customers, and prohibiting this would violate competition law.
White House Proposes a Compromise
Last month, the White House intervened, proposing a compromise that allows stablecoin yields in specific scenarios such as peer-to-peer payments, but prohibits yields on idle holdings. Crypto companies have accepted this proposal, yet banks continue to oppose it, believing it could still lead to depositor outflows. Some legislators also support the banks' stance.
Greater Challenges for Act's Passage
President Trump criticized the banking industry's attempts to undermine the crypto agenda on Truth Social. The act still needs to resolve discrepancies over ethical and non-compliance financial clauses, and there is limited legislative time. If Democrats secure more seats in the November elections, the probability of the act's passage may further decline. With the complexity of the Middle Eastern situation and cryptocurrency industry regulatory challenges increasing, the fate of the CLARITY Act remains uncertain in the coming months.
