The Stablecoin Yield Debate: How Banks Lobby Renegotiates Key Clause Statements of the U.S. Crypto Act

Negotiations in the U.S. Congress around the Crypto Market Structure Act have reached an unexpected stalemate. It was not the political divide between Republicans and Democrats, nor the traditional antagonism between crypto enthusiasts and regulators, but the sudden intervention of the banking lobby that completely rewrote the formulation of this key piece of legislation. The stablecoin yield clauses, which were agreed upon last year, are now at risk of being reinterpreted, and this behind-the-scenes negotiating war is determining the future of the crypto industry in the United States.

From the GENIUS Act to the New Market Structure Act: The Driving Force Behind the Policy Change

In July 2024, the U.S. Congress passed the GENIUS Act, which was once considered a balancing act between the crypto industry and regulators. In the bill, stablecoin issuers are prohibited from providing yield to holders, but at the same time, the bill deliberately retains the right of third-party platforms, intermediaries and exchanges to provide rewards. This subtle arrangement of expression should leave plenty of room for crypto platforms to operate.

However, everything changed when the Senate Banking Committee began considering the Digital Asset Market Clarity Act, the new Market Structure Act, this month. The first vote, scheduled for this week, faced unprecedented pressure from financial lobbies such as the American Bankers Association (ABA). These bank representatives claimed that allowing crypto platforms to offer stablecoin yields to customers is effectively competing with traditional bank deposit products, which will threaten the survival foundation of U.S. community banks and then harm the credit supply chain of the entire financial system.

Banks vs. Crypto Positions Opposed: Who Speaks for Whom

Lobby representatives in the crypto industry suspect that big banks, under the banner of “protecting community banks,” are actually vying for dominance of the payments market for themselves. Summer Mersinger, CEO of the Blockchain Association, pointed out poignantly: “What threatens the progress of the bill is not a lack of political participation, but a relentless pressure campaign by big banks trying to reshape the law to assert their position.” "

This accusation is not groundless. JPMorgan Chase’s CFO acknowledged during a recent earnings call that the high yields offered by stablecoin platforms do pose competitive pressure on traditional bank deposits. However, Kara Calvert, vice president of policy at Coinbase, believes that the bank’s concerns are economically untenable. She pointed out that there is a fundamental difference between stablecoin yields and bank deposits: banks use customer deposits for lending and other investment activities, and pay interest on deposits through interest income from these activities; Crypto platforms only act as agents to hold customers’ stablecoin assets, and the income comes from agreement sharing with stablecoin issuers or fees for trading activities.

New Negotiation Formulation: How Compromise Packages Are a Game-Changer

The draft, released by the Senate Banking Committee on Thursday, embodies a partial victory in the bank’s lobbying. The new clause stipulates that if the stablecoin is only statically held by users (similar to a savings account), the platform shall not provide income. However, this does not completely close all loopholes - income can still be generated through user activity (e.g., trading, staking, lending).

This subtle difference in expression has actually become the most dramatic compromise in the negotiations. Coinbase CEO Brian Armstrong publicly threatened last month that the company would withdraw its support for the law if the bill banned stablecoin yields entirely. The crypto industry collectively sent a letter to senators in December last year, emphasizing that the careful balance of stablecoin returns in the GENIUS Act is a “carefully negotiated compromise” and should not be easily overturned.

Corey Frayer, a crypto consultant at the Consumer Alliance, believes that the whole controversy may be exaggerated. He pointed out that the impact of banning stablecoin earnings held at rest has minimal impact in actual implementation, because the main way for crypto platforms to obtain income happens to come from staking, lending and other activities, which are clearly exempt from the ban.

Uncertainty of the Legislative Prospects: A Long Game Under Multiple Forces

Even if the Banking Commission compromises on this point, the outlook for the bill as a whole remains unclear. This week’s release of the new draft is not final – the committee is currently receiving amendments that could be included in marker considerations. To complicate matters, the Senate Agriculture Committee also holds the decision on the bill, which has postponed its marked consideration until the end of January for further negotiations.

Even if the two committees eventually pass their own versions of the bill, they will need to be coordinated into a uniform draft before they can be submitted to the full Senate for a vote. In this long negotiation process, Wall Street lobbyists are bound to continue to exert influence.

Summer Mersinger of the Blockchain Association warned that if the bank lobby “detonates” the bill with unreasonable terms, they will end up just keeping the status quo — the existing provisions of the GENIUS Act. And this status quo, which they themselves once declared “completely unfeasible”, may be the default result of the failure of the lobbying. “This outcome will be self-inflicted,” she said, “and it will clearly reveal who is fighting for consumers and who is trying to maintain monopoly power.” "

This negotiation on the wording of the bill may ultimately determine the regulatory fate of the US crypto industry in the coming years. Every price debate between banks and technology, every wording adjustment, is pricing the legitimacy of this emerging industry.