Senate Banking Committee markup of the Clarity Act remains delayed as lawmakers negotiate whether to ban stablecoin rewards. The emerging compromise would prohibit passive yield on idle balances but permit transaction-based rewards, and would bar bank-like terminology (“yield,” “APR”). ICBA estimates that allowing stablecoin yield could reduce community bank lending by $850 billion from $1.3 trillion in deposit outflows. The compromise may limit the damage but will not eliminate the threat. If customers can earn rewards on stablecoin balances held at a crypto exchange, they have a direct incentive to move money out of low-cost deposit accounts.
What you should do: Contact your senators, especially if they serve on the Banking Committee. Explain how deposit flight to yield-bearing stablecoins could affect the institution’s ability to lend locally.
Source: https://www.law360.com/articles/2453830/dem-says-compromise-can-thread-stablecoin-yield-needle