The CLARITY Act expanded a ban on yield-bearing stablecoins, which industry figures say makes the U.S. dollar less competitive versus China’s yield-bearing digital yuan. (Ed. note: The People’s Bank of China allowed commercial banks to pay interest on digital yuan deposits in January.)
Anthony Scaramucci, founder of SkyBridge Capital, responded and said “The whole system is broken.” “The Banks do not want the competition from the stablecoin issuers, so they’re blocking the yield. In the meantime, the Chinese are issuing yield, so what do you think the emerging countries will choose as a rail system, the one with or without yield?”
Brian Armstrong, CEO of Coinbase, warned that banning yield on U.S. stablecoins could undermine the dollar in foreign exchange markets. “I worry we are missing the forest through the trees in the US. Rewards on stablecoins will not change lending one bit, but it does have a big impact on whether US stablecoins are competitive,” he said.
Industry executives say the prohibition is a core pain point and claim it protects incumbent banks from competition. This complaint was also voiced by other crypto leaders.
The CLARITY Act broadened the ban originally set out in the GENIUS framework. Bank of America CEO Brian Moynihan warned on an earnings call that stablecoins could trigger roughly $6 trillion in deposit outflows, which might reduce banks’ lending capacity.
