The cryptocurrency exchange Coinbase is opposing a current compromise proposal in the U.S. Senate aimed at regulating stablecoins. At issue are planned rules concerning so-called yields on stablecoins, which are intended to form part of a broader bill defining the structure of the crypto market. Company representatives expressed concerns during a meeting with senators about the wording related to how these digital assets may generate returns.
An earlier proposal would prohibit third parties such as crypto exchanges from paying yields on stablecoins. The measure is intended to limit risks to the banking system, particularly the potential outflow of deposits. Coinbase is one of the most influential lobbying players in the U.S. crypto sector and had already withdrawn its support for the bill in January, prompting the Senate Banking Committee to postpone further consideration.
Negotiations are currently being led in part by Senators Thom Tillis and Angela Alsobrooks. Talks between representatives of the crypto industry and the banking sector are ongoing, but no final agreement has been reached so far. The White House has also hosted several mediation meetings.
At the center of the dispute is whether stablecoin yields represent a regulatory loophole. Banks argue that such offerings by exchanges create a gap in the rules and could draw deposits away from the traditional financial system. The crypto industry considers these risks overstated and accuses banks of anti-competitive behavior.
Political urgency is high: Republicans are pushing to pass the legislation before the midterm elections, as the balance of power in Congress could shift. The House of Representatives already passed its own version of the bill, known as the “Clarity Act,” in July.
Government and political representatives remain optimistic. Patrick Witt pointed to exaggerated fears in the public debate and expressed confidence that an agreement will be reached. Senator Cynthia Lummis also emphasized the need for a bipartisan compromise, stressing that both the protection of stablecoin yields and the stability of regional banks must be ensured.
Source: Zerohedge