Banks, Crypto Firms See Hope For Breakthrough On Clarity Act: Report

• Crypto and banking industry stakeholders reportedly reviewed a revised compromise on stablecoin yield provisions last week, according to a Crypto in America newsletter.
• Stakeholders expressed cautious optimism that a workable solution had been reached.
• The revised deal follows two months of negotiations after objections to a late-March draft.

Crypto and banking industry stakeholders have reportedly reviewed a revised compromise on stablecoin yield last week and expressed cautious optimism, which could end the stalemate around the CLARITY Act. 

According to a report by Crypto in America on Monday, two people who viewed the revised draft last week said they were “hopeful” that a “workable solution” had been reached in the latest iteration.

The comments come after a small group of cryptocurrency industry executives reviewed the document on Thursday, followed by banks on Friday. The revised deal came after two months of negotiations, following a late-March draft released by Senators Thom Tillis and Angela Alsobrooks that drew sharp objections from major crypto companies like Coinbase (COIN) and Stripe.

Senate Banking Committee Chair Tim Scott is now reportedly expected to schedule a markup of the CLARITY Act in the final two weeks of April, although the full revised text has not yet been released publicly. 

The DeFi Problem

The CLARITY Act seeks to establish a federal regulatory framework for payment stablecoins in the US. Yield provisions have been among the most debated issues in recent negotiations. However, a key challenge has been crafting suitable rules for decentralized finance (DeFi), as lawmakers struggled to define DeFi protocols and impose meaningful oversight.

The Digital Chamber stated that DeFi policy principles stress that regulation should be based on possession and control, not on making software. Developers of non-custodial, open-source protocols shouldn't be considered as financial middlemen or held responsible for what users do. On the other hand, institutional actors that utilize DeFi on behalf of customers should be responsible for compliance when they have control.

Broader Tokenization Push Gains Momentum

The crypto industry continues to actively engage with U.S. regulators on tokenization. On Monday, the Blockchain Association submitted a formal response to the US Securities and Exchange Commission (SEC), rebutting Citadel Securities’ arguments against tokenized U.S. equity securities and DeFi trading protocols.

In the letter, the Blockchain Association argued that tokenization has the potential to make capital markets more efficient, transparent, and resilient, and urged the U.S. to lead in this space. 

Read also: Small-Cap Tech Stock Bets $400M On Bitcoin Quantum Upgrade Amid Rising Industry Risks

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