Tensions between the banking sector and the cryptocurrency industry over stablecoins are increasing in the United States.
Trade associations representing different sectors of the US banking industry have sent a letter to the Senate Banking Committee calling for significant changes to the reward and yield mechanisms included in the Tillis-Alsobrooks stablecoin deal.
According to shared information, banking institutions argued that the current draft text would “circumvent” restrictions on stablecoin rewards. Banks said the proposed regulation would incentivize customers to increase their stablecoin balances rather than their bank deposits.
The letter contained the following statements:
“The proposed text includes exceptions that would circumvent the proposed ban, by encouraging customers to maintain and grow their stablecoin balances at the expense of deposits.”
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The banking industry’s letter is considered one of the strongest warnings yet against the cryptocurrency market’s bill structure. Industry representatives warned senators that the current consensus on stable reward systems could accelerate deposit outflows from the financial system.
Meanwhile, in Washington, all eyes are on the Senate Banking Committee. It appears that the committee could begin reviewing the bill regarding the structure of the cryptocurrency market as early as next week.
The recent stablecoin compromise between Republican Senator Thom Tillis and Democratic Senator Angela Alsobrooks aims to prevent stablecoin issues from providing users with direct interest-like returns. The banking lobby, however, believes that certain exceptions in the current text could make this ban ineffective.
*This does not constitute investment advice.
