CLARITY’s delay to test Wall Street’s $6.6 trillion stablecoin warning which is at odds with White House view

The CLARITY Act's delay in Senate Banking deliberations presents an unexpected market experiment regarding stablecoin yield. While unresolved disputes over DeFi, jurisdiction, and stablecoin yield language have stalled the bill, this pause allows the market to generate data on Wall Street's concerns about potential deposit outflows to stablecoins. Banks, citing up to $6.6 trillion in deposits at risk, fear exchange-funded inducements could pull savings. However, the White House Council of Economic Advisers suggests eliminating stablecoin yield would have a minimal impact on bank lending. The current market size of stablecoins is about 1.66% of US commercial bank deposits, large enough for competitive friction but small enough to not destabilize aggregate funding. If the CLARITY Act stalls and regulatory rulemaking doesn't close the 'rewards lane,' observable data on flows between bank accounts and stablecoins, retail cash allocation, and bank responses could emerge. This empirical evidence would be crucial for the international policy debate, which currently relies on projections. A bearish outcome would occur if Congress or agencies finalize rules broadly enough to prohibit these rewards before the market generates useful data, leaving the debate on theoretical grounds.

(Source：CryptoSlate)