Add ZyCrypto News On Google
US banks are reportedly looking to block passage of the CLARITY Act, which was agreed after marathon negotiations lasting more than a year. The American Senate Banking Committee is set to vote on the clutch bill on May 14, but there is a lot of behind-the-scenes maneuvering to stall it or stop its passage entirely.
The American banks are reportedly looking to sabotage the bill as it would undermine the legacy banking system and bring it to its knees. The huge financial giants, long dismissive of Bitcoin and cryptocurrency as speculative scams, are now mounting an aggressive lobbying campaign to stifle competition from the stablecoin economy.
For tens of millions of crypto users around the world, this could spell another betrayal from their elected representatives in the Senate, many of whom promised to ease restrictions on the crypto economy. As things stand, the bill up for a vote in the upper house of the US Congress is already a watered-down version of the previously floated proposal, under which stablecoins would have been allowed to generate passive yield.
However, the banks lobbied hard to remove this provision, and as a result, only “activity-based” rewards can be doled out to stablecoin users. Initially, major companies like Tether and Circle, the issuers of USDT and USDC, were against this move, but, led by Coinbase, the industry has gradually come to accept the activity-based rewards regime and is looking forward to its passage.
But now that the bill is nearing approval from the committee that will send it to the Senate floor for a full vote, there is growing discontent among major financial institutions, many of whom, including the American Bankers Association, Bank Policy Institute, and others, who had rejected even this compromise, are lobbying nonstop against it.
 
In a joint statement, the dissenting outlets recently said that the wording of the new compromise contains loopholes that stablecoin companies could exploit. The disguised stablecoin yield would still put conventional finance organizations like banks out of business, since they only promise rates like 0.01% or single-digit rates to their investors. Upto 20% capital impact will be borne by them, they argue.
The Future
The legislation was agreed to by Senators Thom Tillis (R-NC) and Angela Alsobrooks (D-MD), who have maintained that the banks’ issues have already been addressed. They argue that the country is lagging behind the rest of the world, and clarity is urgently needed on the stablecoin front to foster U.S. competitiveness and improve regulatory oversight.
It remains to be seen just how much the banks will be able to sway on Thursday, when voting is slated to take place.