The gloves are off as the crypto and banking lobby escalate their fight for stablecoin rewards ahead of the crypto market structure bill markup.
For the banking industry, the markup of the crypto bill (CLARITY Act) presents the best opportunity to ensure that stablecoin yields are banned, thereby protecting its turf.
Otherwise, it would be forced to seek an amendment of the stablecoin law, the GENIUS Act.
To counter banks, the crypto industry has heightened pressure on lawmakers. And the sector also has the support of the White House.
In a statement, Patrick Witt, Executive Director of the President’s Council of Advisors for Digital Assets, slammed the stablecoin yield critics.
He warned that they would “preserve the status quo” and “achieve nothing” if the bill fails because of the yield issue.
Over 125 crypto firms and organizations had written to the Congress, urging lawmakers not to amend the GENIUS Act to banks’ interests.
Echoing the same, Joseph Lubin, Ethereum co-founder, said that keeping the stablecoin yield would reinforce U.S. competitiveness. He added,
“We shouldn’t undercut this world-changing innovation by restricting consumer freedom to put their money to work. The GENIUS Act was careful not to do that.”
The banks, on the other hand, have continued to express strong criticism of stablecoin rewards, viewing them as a risk to deposits and a threat to their financial lifeline.
Additionally, they argued that crypto shocks, such as the October 10 crash, could affect the broader financial system.
On his part, Brian Armstrong, Coinbase CEO, also maintained the ‘national security’ and global competitiveness argument. He downplayed banking sector fears on stablecoin yield and cautioned,
“I worry we are missing the forest through the trees in the U.S. rewards on stablecoins will not change lending one bit – but it does have a big impact on whether U.S. stablecoins are competitive.”
For Mike Novogratz, CEO of Galaxy, reversing the GENIUS Act would be “foolish,” and he urged banks to “toughen up and compete.”
The recent discussion on yield underscores that it will likely be one of the contentious issues during the markup scheduled for the 15th of January.
Along with DeFi regulation and ethics provisions targeting President Donald Trump, these issues could be deal-breakers, according to some policy watchers.
