This week banks and crypto lobbyists may reach a compromise on stablecoin yield payments, according to U.S. Senator Tim Scott. Currently, the Senate’s crypto market structure bill progress remains stalled.
Summary
- Senator Tim Scott says a proposal to resolve the stablecoin yield dispute could arrive this week, raising hopes for movement on the stalled Senate crypto market structure bill.
- Talks have slowed over a provision targeting stablecoin yield payments, with banks warning of deposit outflows while crypto firms argue the restriction would limit competition
Speaking at a crypto lobby event in Washington, Scott, who chairs the Senate Banking Committee, said he expects to “have the first proposal in my hands to take a look at.”
“If that actually happens before the end of this week, and I think that it will […] I think we’re going to be in much better shape,” he said.
Regulation has been stalled
The bill in question is the Senate’s crypto market structure legislation, formally known as the Digital Asset Market Clarity Act (or the CLARITY Act), which was introduced to outline how regulators will oversee digital assets and define the roles of different agencies.
However, progress around the legislation came to a standstill after disagreements emerged over a provision that would ban third parties from offering stablecoin yield payments.
Bankers argue that such yield offerings create a loophole that could drive deposits away from traditional banks, while crypto proponents say the restriction is anti-competitive and limits user incentives.
The bill concerns both the Securities and Exchange Commission and the Commodity Futures Trading Commission.
Senate Banking, which oversees the SEC, indefinitely postponed a markup of the bill in January. Subsequently, the Senate Agriculture Committee, which oversees the CFTC, advanced its version to the Senate floor.
Over the past weeks, bankers and crypto lobbyists have met for multiple closed-door meetings to negotiate a middle ground, but the Senate Banking Committee has not yet scheduled any formal updates to the legislative calendar.
In recent comments, House Financial Services Committee chair French Hill said the CLARITY Act can help address some of the unresolved issues tied to stablecoin regulation and broader market structure concerns.
Other issues being addressed
According to Scott, the negotiations extend beyond just stablecoin yield, and other provisions around ethics, decentralized finance, and “who is carved in and who is carved out” are also being worked through.
“We have made a lot of progress over the last probably 30 days or so,” he said, adding that regulators and lawmakers are continuing to narrow differences as momentum builds behind the bill.