CLARITY Act Stablecoin Yield Ban Seen as Risk to US Dollar
The prohibition on yield-bearing stablecoins in the CLARITY Act could weaken the US dollar’s position relative to China’s Digital Yuan, which offers interest, according to Anthony Scaramucci, founder of SkyBridge Capital.
Scaramucci criticized the framework’s restriction on crypto exchanges and service providers offering yield on stablecoins, asserting that banks are limiting competition from stablecoin issuers and that emerging markets may prefer payment systems that provide interest.
The CLARITY Act. Source: United States Congress
The People’s Bank of China began permitting commercial banks to pay interest on digital yuan deposits in January.
Coinbase CEO Brian Armstrong similarly cautioned that banning yield on US dollar stablecoins could reduce the dollar’s competitiveness versus the Digital Yuan in foreign exchange markets. He added that while stablecoin rewards do not affect lending activity, they are significant for the global competitiveness of US stablecoins.
Armstrong and other industry executives have argued that the yield ban was added to limit competition and safeguard the traditional banking sector.
Bank of America CEO says stablecoins could trigger $6 trillion shift from bank deposits
The CLARITY Act widened the scope of a yield prohibition first introduced in the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, a proposed oversight framework for US dollar stablecoins.
During an earnings call on Wednesday, Bank of America CEO Brian Moynihan said stablecoins could prompt up to $6 trillion in outflows from bank deposits. He noted that a large movement of deposits away from traditional banks could constrain the lending capacity of the banking industry.
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