- A supposed compromise on stablecoin rewards proposed by banks for the pending Clarity Act is reportedly creating more confusion and uncertainty for the digital asset sector.
Stablecoin rewards remain a sticking point in ongoing deliberations between banking and crypto representatives on the pending Clarity Act. The latest developments indicate they may still be far from the much-awaited compromise.
The New Proviso on the Clarity Act
According to sources, including Crypto in America’s Eleanor Terrett and CoinDesk, the banking sector crafted a new language in an effort to loosen the deadlock in the pending legislation as early as Friday. However, it was only on Monday when more details about the matter became clearer.
Reports stated that insiders described the new language as “cringy” because its narrow and unclear wording raises more questions. They claimed that the vague interpretation of the text could only lead to more confusion if Congress adopts it.
The Proposed Rules on Stablecoin Rewards
The banking side of the talks purportedly agreed to stablecoin rewards, but under strict conditions. First, the rule should apply only to “allowed activities,” rather than paying holders for simply maintaining token balances. Second, yields should not resemble those of interest-bearing bank deposits to prevent capital flight and protect the lending industry.
Terrett noted that banks wanted to bar stablecoins from offering anything “economically or functionally equivalent” to interest payments on bank deposits. They also sought to extend enforcement of the rules to all digital asset service providers, including crypto exchanges and brokers, as well as their affiliates, to prevent businesses from circumventing the prohibitions.
On the other hand, the update has greenlit incentives tied to user activities, limited to loyalty, promotional, or subscription programs.
Polarizing Perspectives
Critics and insiders pointed out that the proposed exemptions are too restrictive. They fear that anti-crypto regulators could use the all-encompassing “economic equivalence” clause to dampen stablecoin features and operations.
Additionally, crypto supporters considered the accompanying stipulation to be too restrictive and misleading. They also argued that stablecoin rewards are nothing like bank deposits.
However, some members of the crypto community saw the new language as a sign of progress. Those with a pragmatic viewpoint saw the banks’ stance “largely in line with expectations” and on course toward a “balanced outcome.”
The optimistic participants admitted that the text is still too broad, but it is a significant improvement from the initial version, which heavily restricted crypto in favor of traditional banks.
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