Yesterday, there was a third White House meeting addressing stablecoin yield. The draft Clarity Act for crypto reportedly includes a clause intended to prevent yield in an effort to reduce deposit flight from banks. Coinbase pulled support for the bill, noting the exchange currently offers 3.5% on USDC balances. In the latest talks, officials proposed wording that would allow rewards only linked to transactions, not deposits.
Patrick Witt, Executive Director of the President’s Council of Advisors for Digital Assets, outlined draft text that would permit rewards for “activities or transactions” rather than balances. He said the goal is to find a middle ground amid concerns about deposit flight from stablecoins on different platforms, describing balance-based yield as “idle yield.”
US banking groups are now discussing the exact wording with a view to signing off. Most jurisdictions allow rewards, but not something that resembles interest; however, international wording in some cases could potentially block more sophisticated transactions that traditional finance might want to pursue.
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