Banks Issue Panicked Statements Following Major Progress on the Clarity Act Today

Joint trade groups representing the banking sector in the US have argued that stablecoin regulations under the CLARITY Act should be further tightened. In a joint statement, industry representatives specifically called for stronger limitations on interest-like rewards offered to stablecoin holders.

The statement read, “The banking sector continues to believe that the ban on interest-like rewards for holding stablecoins should be further strengthened.” However, sector representatives indicated that limited reward mechanisms could be permitted for certain payment-focused stablecoin transactions and activities.

Banking institutions have argued that, in the absence of adequate safeguards, stablecoin products could reduce traditional bank deposits, putting pressure on local lending activity and economic activity. The statement also indicated that the sector will continue to work with senators “in good faith” to address concerns about stablecoin yield mechanisms and increase the bill’s chances of passing the Senate floor.

Today, the US Senate Banking Committee passed the CLARITY Act, also known as the Crypto Market Structure Act, with 15 votes in favor and 9 against, officially submitting the bill to a vote in the Senate General Assembly.

*This is not investment advice.