- The US Senate pushes for the Clarity Act’s markup in the last two weeks of April.
- The primary point of contention between the banking and crypto sectors regarding the bill centers on stablecoin yields.
Parties at the negotiations table and the White House initially targeted the Clarity Act’s markup on the Senate floor by March. However, the dissatisfaction with the bill’s language has pushed the schedule to a later date. Now, reports claim that senators are preparing to proceed with the event by April.
The Clarity Act Markup Schedule
According to Eleanor Terrett, host of Crypto In America, an unnamed spokesperson of Senator Thom Tillis, a Republican representing North Carolina, has confirmed the matter. The most likely timeline for it is the last two weeks of the month.
The schedule aims to give the banking and crypto sectors enough time to resolve their remaining issues at the committee level regarding the sticky provisions of the pending Clarity Act. The debate among participants mostly centered on stablecoin yields, which the banking industry and its allies fear could trigger capital flight from traditional bank deposits.
Concerns Over the Bill’s Stablecoin Provision
The Bank of America (BoA) earlier warned that stablecoin rewards could pull over $6 trillion and compromise the banking system’s lending capabilities. It said the scenario would be detrimental to borrowers, especially small- and medium-sized enterprises.
On the other hand, White House crypto adviser Patrick Witt, as well as representatives and supporters of the crypto industry, argued that stablecoins have been offering rewards for years. Still, it’s only now that banks are raising the possibility of capital flight from deposits.
Additionally, they pointed out that the proposed tight restrictions on stablecoin interest payments would curtail competition and innovation. What’s worse, it would limit how ordinary people could earn from their digital assets.
Coinbase is the loudest critic of the new language of the pending legislation, and has already rejected the compromise pushed by banks. CEO Brian Armstrong has repeatedly emphasized that the company will be more profitable if it stops paying yields on its users’ USDC holdings, but has maintained that its support for the Clarity Act is in the best interests of the crypto industry.
However, many in the crypto community raised concerns that Coinbase’s goal of not cooperating to reach a compromise in the stablecoin debate over the Clarity Act is not a noble one at all. In reality, the company is protecting the $1.35 billion annual revenue it reportedly gains from stablecoins alone.
At this rate, the current form of the Clarity Act allows rewards for stablecoin activities, which are not “economically or functionally equivalent” to interest payments on bank deposits.
