U.S. Crypto Regulation Bill Hits Roadblock Over Stablecoin Rewards Dispute

The U.S. CLARITY Act, a major bill aimed at regulating the cryptocurrency market, has encountered significant obstacles in its passage due to disagreements between banks and crypto companies over stablecoin rewards.

Banks have expressed concerns that allowing stablecoins with rewards could lead to substantial outflows of funds from traditional bank accounts, potentially weakening the banking system. They estimate that this could result in up to $500 billion being pulled from deposits in the coming years.

The White House had proposed a compromise solution, which would allow rewards for specific uses such as peer-to-peer payments while banning incentives for idle stablecoins in wallets. However, banks rejected this proposal and are pushing for stricter limits on stablecoin rewards.

Despite the setback, the U.S. Securities and Exchange Commission (SEC) will be hosting a roundtable on April 16 to discuss future rules for digital assets. The event aims to examine how new crypto regulations could balance innovation with investor protection.