The finalization of a major US digital asset bill has ignited a fierce debate over whether stablecoins should be permitted to pay interest, a decision that could redefine the future of money and banking. At the heart of the legislative battle is the CLARITY Act, a crypto market structure framework that, in its current draft, would prohibit "interest for holding" stablecoins. This provision has created a political fault line, pitting traditional banks against the crypto industry and raising concerns about the US dollar's global standing.
Banks and regulators are pushing back hard, arguing that yield-bearing stablecoins fundamentally transform the instrument from a payments tool into a savings product. Bank of America CEO Brian Moynihan has publicly warned that this could trigger a massive exodus of deposits, estimating potential outflows of up to $6 trillion. Banks contend that such a drain would force them to rely on more expensive wholesale funding, leading to tighter credit conditions, higher loan rates, and increased systemic risk, as stablecoin issuers lack access to central bank liquidity facilities.
The crypto industry, led by figures like Coinbase CEO Brian Armstrong and SkyBridge Capital founder Anthony Scaramucci, offers a stark counterargument. They assert that yield does not equate to lending risk if stablecoin reserves are fully backed and transparent. They view the proposed ban as a protectionist move by incumbent banks to stifle competition. "The Banks do not want the competition from the stablecoin issuers, so they’re blocking the yield," Scaramucci stated.
The debate carries significant geopolitical weight. Critics point out that China's Digital Yuan, a central bank digital currency (CBDC) issued by the People's Bank of China, already allows for interest payments. Scaramucci and Armstrong warn that prohibiting yield on US stablecoins puts the dollar at a competitive disadvantage in the global financial system, potentially driving emerging nations towards China's yield-bearing digital rail. "I worry we are missing the forest through the trees in the US," Armstrong said, emphasizing that rewards impact competitiveness more than lending.
The tension recently escalated when Coinbase withdrew its support for the broader crypto bill, arguing the yield restrictions would undermine innovation. Lawmakers now face a profound choice: whether to keep stablecoins as a narrow payments rail or allow them to evolve into a genuine competitor to bank deposits, a decision that will shape the future of finance in the United States.
