The debate over “yield” in the context of stablecoin regulation in the US has reached a new impasse.
Although the White House reportedly wants the agreement on stablecoin yields to be finalized by the end of this week, a banking source directly involved in the process says this timeline is unrealistic.
The source stated that the process does not seem likely to be completed before the end of March, saying, “Patrick Witt made an unfortunate mistake by telling the press that it would be completed before March. This regulation will not be issued before March.”
It is reported that the cryptocurrency sector and banking lobbies still have significant disagreements, particularly regarding whether or not stablecoin holders should receive returns. This disagreement is also slowing the progress of a broader cryptocurrency market structure bill. A source stated, “Is a text circulating? Yes. Are the texts similar? No. We are not close to a bill.”
At the heart of the debate is whether stablecoins can offer users interest-like returns. Cryptocurrency companies argue that stablecoins should be able to pass on returns to users similar to those earned from assets like US Treasury bonds, while the banking sector argues that this would create a deposit-like structure and disrupt competition with the traditional banking system.
The source also said that Brian Armstrong’s involvement could be critical for the process to move forward. Armstrong, the CEO of Coinbase, is a vocal advocate for stablecoins to provide returns to their users. “If Brian Armstrong doesn’t come to the table, there’s a very high chance this whole process will completely fall apart,” the source said, indicating the seriousness of the current impasse.
However, the banking sector also wants an agreement, but it is estimated that if a compromise cannot be reached within the next month, the chances of the bill passing could drop to almost zero.
*This is not investment advice.