Crypto industry leaders mostly celebrated over the weekend as lawmakers unveiled a solution to a dispute that has plagued the Clarity Act, a major crypto bill, for months—but questions abound about whether the proposed compromise will be seen as such by the banking industry.
On Friday, Senators Thom Tillis (R-NC) and Angela Alsobrooks (D-MD) unveiled new Clarity Act language pertaining to rewards offered by crypto companies on holdings of stablecoins, cryptocurrencies pegged to the value of the U.S. dollar.
The Clarity Act would formally legalize most types of crypto activity in the United States, and has been at the top of the industry’s policy wish list for years.
And while key crypto stakeholders have given the proposed compromise their blessing, banking-side negotiators have stayed notably silent.
The new stablecoin yield compromise between the two camps would prohibit the payment of rewards on stablecoins in a manner that is “economically or functionally equivalent to the payment of interest or yield on an interest-bearing bank deposit.”
That language would mean no rewards on stablecoin deposits—but, potentially, rewards on stablecoin transactions and other types of account activity.
Friday’s proposal would task regulators and the Secretary of the Treasury with creating a list of permissible reward categories after the Clarity Act’s passage. Per the new legislative language, that list could include rewards tied to participation in governance, validation, and staking. Further, such rewards could be calculated by referencing a user’s account balance.
What does that all mean? Lots of policy leaders have lots of opinions. One DC insider told Decrypt that the banks are likely to balk at the potential exception for staking-related activity and the ability for such rewards to reference account balances.
The American Bankers Association, one of the lead bank-side negotiators on the Clarity Act, said last week that crypto firms must not only be barred from offering yield on stablecoin deposits directly, but also from “allow[ing] yield-like benefits to reach stablecoin holders indirectly.”
The bankers’ group also sought to root out “cosmetic structuring designed to replicate yield.”
Though the banking and crypto lobbies have gone back and forth on the question of stablecoin yield for months, time is now beginning to run out. Tim Scott (R-SC), the chair of the Senate Banking Committee, said he plans to schedule a vote on the Clarity Act this month.
