Senators Say CLARITY Act Impasse Closer to Breaking
Lawmakers have reportedly made some progress on the cryptocurrency-focused CLARITY Act after weeks of impasse.
The bill has been stalled in committee since January, but a pair of senators say they’ve reached a tentative agreement with the White House about language they want to include in the legislation, Politico reported Friday (March 20).
That language, the report said, is designed to resolve a dispute between the banking and crypto sectors around stablecoin yield, and could represent a breakthrough for the bill.
The agreement between Sen. Thom Tillis, R-N.C., Sen. Angela Alsobrooks, D-Md., and White House officials could set the stage for the bill to move forward in the weeks to come, Politico added. The CLARITY Act had been on hold with the Senate Banking Committee since January, partially because of the disagreement between banks and crypto firms.
“Sen. Tillis and I do have an agreement in principle,” Alsobrooks said in an interview with Politico. “We’ve come a long way. And I think what it will do is to allow us to protect innovation, but also gives us the opportunity to prevent widespread deposit flight.”
As the report noted, the disagreement had centered around whether crypto exchanges should be permitted to pay yield to stablecoin holders through rewards programs. Tillis and Alsobrooks have both been sympathetic to concerns raised by banks that letting stablecoins pay any kind of yield could cause customers to pull their deposits.
Politico added that it’s not clear what is included in the agreement, and that there is no guarantee either industry will support it.
Tillis told the news outlet he feels “like we’re in a good place” with the tentative accord, while adding that he still plans “to vet it with industry.”
In an interview earlier this month with the Wolf of All Streets podcast, former Commodity Futures Trading Commission (CFTC) chair Christopher Giancarlo cautioned that crypto will still continue to flourish regardless of the banking industry’s position.
“If the banks resist this now, it’s not going to go away. It’s just going to go to Europe. It’s going to go to Asia … and then American banks will say, ‘Whoa. Our analog, identity-based, message-based system is no longer working anywhere outside,’” he said.
Meanwhile, new research by PYMNTS Intelligence shows that businesses that want to use stablecoins are more interested in working with banks than with crypto wallets.
Those wallets, while efficient, “introduce unfamiliar risks: private key management, fragmented reporting, uncertain custody standards and evolving regulatory interpretations,” PYMNTS wrote last week. “Banks, by contrast, provide a trust layer that CFOs already understand.”
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