A new proposal to advance the crypto market structure bill is being developed by U.S. Senate Democrat Angela Alsobrooks and Republican Senator Thom Tillis. According to Cointelegraph, Alsobrooks, a key member of the Senate Banking Committee, emphasized the need for compromise between crypto and banking sectors, stating that neither side should let the pursuit of perfection hinder progress. She highlighted the importance of regulation to prevent an unregulated system that could lead to deposit flight.
Banking groups, including the American Bankers Association, have advocated for the Senate to incorporate a ban on third-party stablecoin yield payments in the pending crypto market structure legislation. These groups argue that such payments pose a deposit flight risk, potentially destabilizing the banking system. They believe that banning these payments would address a loophole in the GENIUS Act, which prohibits stablecoin issuers from offering yield on their tokens. However, crypto lobby groups have resisted this proposal, as stablecoin yield payments are a popular method for exchanges to attract customers.
The ongoing debate has delayed the progress of the crypto bill, which aims to establish regulatory oversight for the crypto market. Alsobrooks noted that during the GENIUS Act negotiations, lawmakers anticipated the need to revisit issues related to interest and yield. She stressed that the crypto market structure legislation must address stablecoin yields to prevent them from undermining the banking sector. Alsobrooks remarked, "If it quacks like a duck and looks like a duck, it is a duck," underscoring the necessity of ensuring that bank-like products come with bank-like protections.
The American Bankers Association recently released a survey indicating that 42% of respondents believe Congress should ban stablecoin yields if they pose a risk to bank funds. Conducted by Morning Consult, the survey polled a national sample of 4,456 adults and found that 84% agreed businesses offering bank-like services should adhere to the same consumer protection standards as banks. These findings reflect public sentiment on the need for regulatory measures to safeguard the banking system while addressing the evolving crypto landscape.
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