Crypto, Banks Clash Continues With New Proposal Concerns

Bank and crypto lobbyists have both relayed concerns over the latest proposal to end the stalemate on stablecoin yields in the Senate’s crypto market structure bill, legislation that has been in limbo since the House passed the CLARITY Act in July.

Senator Thom Tillis told Politico on Monday that he plans to publicly release a draft agreement this week that aims to end a fight over a provision in the Senate’s crypto policing bill that would ban third parties, such as crypto exchanges, from offering stablecoin yield payments.

The draft had already been seen by banking and crypto representatives earlier this month, with Politico reporting that it drew pushback from the banks, according to three people with knowledge of the matter.

“I think that people are apprehensive because they haven’t seen the full text,” Tillis said. “Directionally, it has been instructed by what we consider to be the legitimate issues that we have around deposit flight when we’re talking about yield.”

The Senate’s crypto market structure bill would outline how the country’s two major market watchdogs would regulate the sector, legislation that the crypto industry has widely pushed for with the Trump administration.

However, the bill’s progress has been stalled as banking and crypto groups have been at odds over language banning stablecoin yields, despite three White House-mediated meetings between the groups to find a middle ground. 

Stablecoin yields are a major business for crypto platforms, but the bank lobby wants to outlaw third-party stablecoin yield payments, arguing it is a risk to the banking system, as customers may pull deposits out of savings accounts.

Tillis said he was open to making changes to the proposal and was aware of the pushback on the agreement. “That’s why we need to get down to a mark that we’re negotiating,” he said.

He added the group had “made progress” on anti-evasion provisions, but was “still working on” language around enforcement.

Related: Banks challenge White House report on stablecoin yields

Tillis said he would look to broker another meeting with the bank and crypto groups if they still can’t agree on a way forward, which would mark the fourth time the government has mediated the two sides.

“If we’ve still got a disagreement from either banking or crypto — and there’s some concern out of crypto, too — then we’re going to get the people in the room and call balls and strikes on the final pieces and see if we can get a mark done,” he said.

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