Although the issue of stablecoin rewards in the 'Transparency in Digital Asset Markets Act,' widely known as the CLARITY Act, seemed to have been settled long ago, it has recently resurfaced due to the efforts of local-level banks.
Local banks — institutions that are locally owned and generally have less capital than their national counterparts — have expressed concern about how the adoption of the CLARITY Act in its current form would affect their ability to attract deposits and, consequently, their lending capacity.
As reported by Punchbowl News, weeks of active lobbying by these small banks have caused concern among Republican senators who have direct ties to bank representatives.
"They know us. Each of us personally knows these people," said Senator Mike Rounds, explaining why their arguments have worked and have already swayed some to oppose the CLARITY bill.
Brad Bolton, CEO of Community Spirit Bank, emphasized the importance of small institutions raising these issues. "It took little-known local bankers like me, from the heartland, to tell the senator: this is what the real-world consequences of this are," he stated.
Although rewards for holding stablecoins were excluded from the current version of the CLARITY Act after lengthy discussions and a compromise between banks and the crypto industry, usage rewards, which would promote stablecoins as a means of payment, remain permitted.
Two Republican senators, Josh Hawley and Jerry Moran, have stated they will oppose the CLARITY Act unless its text is changed to address the issue of stablecoin rewards.
The problem of stablecoin yield compounds another major obstacle facing CLARITY: an ethics provision that depends on negotiations with the White House and on which agreement has not yet been reached.
This is why, despite Senate Majority Leader John Thune scheduling a vote for September, the chances of the CLARITY Act passing have diminished, as disagreements between the two parties and the issues under discussion seem insurmountable.
