In an urgent letter over the weekend, the CEO of the American Banking Association has asked its member CEOs to contact Senators ahead of the Thursday markup of the Clarity Act by the Senate Banking Committee. Early last week several banking associations said they were unhappy with the latest wording relating to stablecoin yield and rewards proposed by Senators Tillis and Alsobrooks. On Friday in a separate letter, the banking associations provided more specific input about the wording that concerns them, which they believe will threaten bank deposits.
While the banks acknowledged the wording has improved, they highlight that the latest iteration provides ample scope for workarounds. For example, the prohibition of interest applies only to payments of interest or yield that are “solely” in connection with holding payment stablecoins. If it is partly linked to something else, that can circumvent the restriction.
The bankers also request the removal of a section which neutralizes the high level ban. It relates to the clause that allows “rewards”, but the clarification allows the payment calculations to be linked to “a balance, tenure or any combination of the foregoing.”
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