As legislative efforts closely affecting the cryptocurrency market in the US gain momentum, a significant turning point has reportedly been reached in the critical stablecoin yield debate between industry representatives and banks.
While uncertainty surrounding the Clarity Act persists, the Senate is preparing for a busy agenda towards the end of April.
Senators will have a relatively quiet week ahead, followed by a busy period focusing on critical issues, primarily the United States Senate Banking Committee. This period aims to secure Kevin Warsh’s confirmation, advance the budget reconciliation package, and, most importantly for the crypto sector, the passage of the Clarity Act.
The issue of stablecoin returns, seen as the biggest obstacle to the law, is causing serious friction between banks and cryptocurrency companies. At the heart of the debate is the question of whether the rewards offered to users on their stablecoin balances will lead to outflows from banks. Following a second round of talks with Senate staff last week, it is reported that the parties are considering a new compromise text and the process is at a critical juncture.
According to two sources close to the industry, representatives from the crypto and banking sectors reviewed the updated compromise text on Thursday, followed by a briefing for banks on Friday. While neither source shared details, they expressed cautious optimism that a viable solution may have been found this time.
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This new draft comes after nearly two months of tense negotiations. A previous draft, prepared by Thom Tillis, Angela Alsobrooks, and the White House at the end of March, had drawn criticism from many industry representatives, most notably Coinbase and Stripe. While Coinbase’s legal director, Paul Grewal, stated last week that an agreement on the legislation could be reached within 48 hours, no concrete progress has been made public so far.
On the other hand, it is still unclear whether the Senate Banking Committee will release the compromise text to the public before the expected “markup” (the process of voting on each item). Committee Chairman Tim Scott is expected to initiate this process in the last two weeks of April.
Another notable element in the process is an economic analysis report prepared by the White House examining the impact of stablecoin yields on the banking system. The fact that this study, reportedly prepared by the White House Board of Economic Advisors, has not yet been made public is raising questions among Senate members. The report allegedly contains findings suggesting that the impact of stablecoin yields on deposit outflows could be favorable to cryptocurrencies.
If the stablecoin yield issue is pushed into the background, the Senate is expected to focus on finalizing the remaining topics, such as DeFi regulation, tokenization, and token classification, over the next two weeks.
*This is not investment advice.
