Stablecoins: Banks refuse any compromise on returns

Stablecoins find themselves at the center of a new standoff between community banks and the crypto sector. Today, in the United States, consideration of the CLARITY Act is reigniting opposition around the returns associated with these digital assets. The Independent Community Bankers of America is calling for a complete ban on rewards tied to these assets. Its leader Rebeca Romero Rainey refuses the idea of ​​a compromise on this issue. At the same time, banks are warning of a possible massive transfer of deposits to digital assets, in this debate.

Stablecoins revive the debate around the CLARITY Act

The CLARITY Act encounters a new difficulty after a compromise between crypto players. The discussions made it possible to limit remuneration linked to stablecoins to certain activities. However, community banks dispute this approach. They ask that the rewards be fully regulated before any progress. This disagreement still blocks the text. The banks want to clarify this.

The Independent Community Bankers of America represents approximately 5,000 U.S. community banks. The association believes that the text could affect their operation and local credit. This request therefore widens the conflict.

ICBA leader Rebeca Romero Rainey takes a firm stance. In a interview at Banking Dive, she believes that the loophole around rewards must disappear entirely.

We always hear the same suggestion: “How can we satisfy both parties on this subject?” » For us, this gap must be completely closed. There is no compromise when it comes to resolution.

Rebeca Romero Rainey, ICBA leader. Source: Banking Dive,

According to her, a compromise does not address the main concern. This position therefore hardens the debate around stablecoins and complicates the search for an agreement. Financial risk structures their argument.

Banks fear a flight of deposits

For ICBA, the main risk concerns deposits held in the banking system. Rebeca Romero Rainey believes that “ 1.3 trillion dollars could join stablecoins if the legislative framework evolves ». According to his estimate, this movement could cause an $850 billion drop in local loans. This fear now weighs on the discussions.

The head of ICBA also highlights the lack of guarantee regarding a return of these funds to local communities. She considers that cryptocurrencies would not automatically replace deposits lost by banks. The association therefore requests that this risk be taken into account. The senators concerned reinforce this opposition.

There is no evidence to suggest that cryptocurrencies would replace these deposits and reinvest them in local communities. This is what caught the attention of several senators. If the data indicates, particularly in our many rural areas, that we will have no alternative to this capital, it is imperative that we find a solution.

Rebeca Romero Rainey, ICBA leader. Source: Banking Dive,

This concern has already found a political echo. Community banks would have convinced Josh Hawley and Jerry Moran to oppose the CLARITY Act in its current form. The question of returns therefore goes beyond the banking sector alone. The debate therefore remains particularly sensitive.

A vote under pressure and opposing positions

Rebeca Romero Rainey also criticizes a report from the White House Council of Economic Advisers. Entitled “Effects of the ban on stablecoin returns on bank loans”, this document, according to her, minimizes fears linked to a flight of deposits. She believes that certain analyzes do not take enough into account possible changes after the adoption of the law. She maintains that the consequences could differ. This divergence further weakens the parliamentary calendar.

The Senate will meet on September 15 to vote on the CLARITY Act. However, it seems unlikely that at least 60 senators will agree to move the text forward. Without this support, the project could be abandoned. Each camp defends its interests here.

What happens next therefore depends on the ability of the different actors to resolve this disagreement. Community banks are calling for a complete ban on stablecoin rewards. A compromise had emerged around limiting remuneration to certain activities. The debate therefore focuses on digital innovation, deposits and local financing.

The next steps will show whether this opposition can evolve before examining the text. Deposit protection remains at the heart of the banking business. For the crypto sector, the wording chosen will determine the conditions applicable to stablecoins.