As debates continue in the US over the Clarity Act, a bill that includes regulations for the cryptocurrency market, Senator Angela Alsobrooks stated that the disagreement between banks and the crypto sector can only be resolved through mutual compromise.
Speaking at the American Bankers Association summit in Washington, Alsobrooks stated that the negotiations might ultimately result in a compromise that would leave “everyone a little unhappy.”
Alsobrooks, in his speech at the summit, stated that the fundamental disagreement between the banking and crypto sectors lies in the reward and yield policies applied to stablecoin assets. Banks argue that cryptocurrency companies offering interest or rewards to stablecoin holders could lead to a shift of deposits from traditional banks to crypto platforms, while the crypto sector claims this concern is exaggerated and stems from competition. Senator Alsobrooks, however, stated that seeking a perfect solution should not hinder progress, and that both sides would need to make some compromises.
Negotiations that have been ongoing for approximately nine months have recently been brought back to Congress. Alsobrooks and Republican Senator Thom Tillis have been meeting with representatives from the banking and crypto sectors to gather feedback on the draft legislation. Alsobrooks stated that the compromise they are working on aims to include protective mechanisms to prevent deposit outflows from banks while also creating a structure that will allow innovation to continue in the crypto sector.
Patrick Witt, who also spoke at the meeting, stated that crypto companies have been offering returns and rewards to their users for years, yet there is no concrete evidence of a large-scale “deposit flight.” Witt humorously criticized this debate in a post on social media platform X, asking, “Where’s the deposit flight? Is it in the same room as us right now?”
The final form of the Clarity Act is still unclear. However, according to Alsobrooks, while transaction or activity-based rewards for stablecoins are considered acceptable under certain conditions, directly paying interest on passively held balances is seen as risky for the banking system. As discussions on the bill continue, it remains uncertain when the Senate Banking Committee will restart the voting process.
*This is not investment advice.
