- The news comes as the CLARITY Act remains stalled at the Senate amid debate over stablecoin yields between the cryptocurrency and banking industry.
- The banks have argued that stablecoin yields would result in a deposit flight.
- Meanwhile, leaders in the cryptocurrency space have advocated that stablecoin rewards promote adoption.
Senator Tim Scott (R-SC) said a new proposal on stablecoin yields could be released by the end of the week, which could potentially be the inflection point to move the CLARITY Act forward.
"I believe that this week we will have the first proposal in my hands to take a look at,” Summit said on Tuesday at the DC Blockchain Summit. “If that actually happened before the end of this week, and I think that it will, we'll at least know that the sketch looks like the person. If that's the case, I think we're gonna be in much better shape."
The overall cryptocurrency market slipped below $2.6 trillion on Wednesday after Bitcoin (BTC) fell below $72,000 for the first time this week and brought its eight-day gains streak to an end.
Could The Stablecoin Proposal Break CLARITY Act Stalemate?
The banking and cryptocurrency leaders have actively championed their respective sides of the debate. Banks believe offering rewards on stablecoin holdings like USDC (USDC) and PayPal USD (PYUSD) would risk deposit flight, while the cryptocurrency side has advocated that stablecoin rewards drive user adoption and bring more people into the financial system with Coinbase’s (COIN) Brian Armstrong voicing the most vocal opposition.
COIN’s stock was down nearly 3.5% in midday trade on Wednesday. Retail sentiment around the cryptocurrency exchange remained in ‘bearish’ territory while chatter increased to ‘normal’ from ‘low’ levels over the past day. Retail sentiment around USDC and PYUSD trended in ‘neutral’ territory.
The last compromise between the two sides on the CLARITY Act proposed that firms would not be able to provide rewards on stablecoin holdings, but could continue to give yield on transactions. The debate has intensified after updated rules for the GENIUS Act proposed last month by the Office of the Comptroller of the Currency (OCC) outlined that each permitted payment stablecoin issuer is limited to a single branded stablecoin. Firms that don’t issue stablecoins can’t provide yield.
The CLARITY Act passed the House with bipartisan support in July last year, but progress in the Senate has slowed amid disputes over stablecoin rewards, ethics rules, and other unresolved issues ahead of the November elections.
Read also: Bitcoin Falls Below $72,000 For The First Time This Week On Hot PPI Data Ahead Of Fed Rate Cut Call
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