🤖AI Summary
Banking associations are lobbying for Section 404 of the CLARITY Act to prevent crypto exchanges from offering yield-generating stablecoin rewards programs after the GENIUS Act banned direct stablecoin interest. Banks argue systemic stability concerns, similar to their failed 1970s opposition to money market funds, while protecting their $490 billion annual spread on depositor funds.
Key Takeaways
- →U.S. banks earn $490 billion annually by paying depositors 0.07-0.42% while earning 3.22% net interest margin on their capital.
- →The GENIUS Act banned stablecoin interest at issuer level, prompting exchanges to create activity-based rewards programs as workarounds.
- →40+ banking associations mobilized to support Section 404 of the CLARITY Act, which would close the stablecoin rewards loophole entirely.
- →Banks previously made identical systemic stability arguments against 1970s money market funds but lost that battle without system collapse.
- →Stablecoins pose greater competitive threat than MMFs because they're spendable, accessible without brokerages, and don't recycle into bank liabilities.
Read Original →via Messari
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