TL;DR:
Bankers are not backing down. During the American Bankers Association (ABA) summit in Washington, more than 1,400 financial leaders agreed that stablecoins are dangerous to their business model.
In this regard, ABA President Cathy Owen warned that the flight of deposits toward digital assets is extremely detrimental to local communities. According to the association, capital in digital wallets does not contribute to credit or regional economic development.
The center of the debate is whether stablecoins are capable of generating yield. Although the Genius Act, signed by President Donald Trump, prohibits issuers from paying interest, there is a legal ambiguity regarding whether exchanges can offer “rewards” for their use.
Banking is pushing to close this legal vacuum in the Clarity Act, the regulatory framework that is currently “shelved” in the Senate. For its part, the crypto industry accuses traditional institutions of trying to stifle competition through the re-litigation of already agreed-upon laws.
This confrontation occurs in the worst-case scenario. With midterm elections on the horizon and internal divisions in the Republican Party, legislative progress seems stalled despite President Trump’s public and notorious support for the crypto ecosystem.
Furthermore, the banking lobby strongly criticized Kraken and the Federal Reserve after the exchange was granted direct access to federal payment systems, which were generally handled by traditional banks.
In conclusion, a short term marked by legislative paralysis and aggressive rhetoric from both sectors is expected. While the DOJ and other regulators monitor capital flows, the battle for control of the $23 trillion payment system is just beginning.
