Crypto Stablecoins Abandon Interest Payments – Major Industry Shift

Digital Chamber Presents Clarity Bill Compromise… Unconventional Proposal “We Will Cooperate in Protecting Bank Deposits”
Accept ‘2-year research’ but reject ‘automatic regulation’… High-level strategy to secure legislative leadership
‘Golden time’ closing ahead of midterm elections… Will a dramatic agreement be reached in a series of meetings at the White House?

Cryptocurrency industry announces abandonment of stablecoin ‘interest payments’…’biggest concession ever’

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The battle between the cryptocurrency industry and traditional banking circles over the ‘CLARITY (Strengthening Transparency) Act’, which will determine the direction of U.S. stablecoin regulation, has reached its peak.

According to CoinGape, a cryptocurrency media outlet, on the 13th (local time), the ‘Digital Chamber’, a representative blockchain industry association, announced its own bill principles refuting the banking sector’s proposal after a recent White House meeting. This can be interpreted as an advanced strategy to protect the autonomy of the industry while avoiding conflict with the existing financial system.

Industry’s unprecedented concession: “Stablecoin interest may be waived”

Digital Chamber CEO Cody Carbone made clear his willingness to compromise with the banking sector in a message to lawmakers. The most notable point is that they are willing to give up interest (yield) payments for holding stablecoins, which can compete directly with bank deposits.

So far, the banking industry has strongly opposed stablecoins, saying that if they provide high rates of return, the deposit base of commercial banks could collapse. CEO Carbon emphasized, “Giving up profit compensation is a significant concession for the industry to pass the Clarity Act,” and added, “However, the compensation system provided to customers who participate in transactions or specific activities must be maintained.”

‘Automatic regulation’ is a poison clause… “Research is one thing, but legislation is another.”

The industry expressed its position that it was acceptable for the ‘2-year study on the impact of stablecoins on bank deposits’ requested by the banking sector. However, it firmly drew a line against the way regulations are automatically enacted based on research results.

The Digital Chamber argues that data-based analysis is welcome, but that approving future regulatory rights in advance without verifying its actual impact could hinder industry growth.

‘Golden time’ legislative clock shrinks due to pressure from midterm elections

Patrick Witt, executive director of the President’s Digital Asset Advisory Council, warned in an interview with Yahoo Finance that time is running out. He diagnosed, “The political world’s attention is quickly shifting to the upcoming midterm elections, so the window of opportunity to pass the bill is closing.”

Secretary-General Witt is mediating by arranging a series of meetings between cryptocurrency companies and large banks at the White House to prevent the bill from being abandoned. He urged a decision from both sides, saying, “Without flexible cooperation between the two groups, passing the bill during this session is virtually impossible.”

Stablecoin legislation in the United States is likely to become a regulatory standard for the global cryptocurrency market. Investors around the world are paying attention to whether the industry’s ‘conditional acceptance’ card can overcome the high threshold of the banking sector and lead to a dramatic agreement.

Taejun Lee, Global Economics Reporter [email protected]

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