Small, targeted changes to market structure legislation for digital assets are all that are needed to ensure the crypto industry can thrive while protecting the deposit base that banks need to provide lending to communities, American Bankers Association President and CEO Rob Nichols told CNBC today.
ABA is urging senators to use the Clarity Act to close a loophole that allows digital asset service providers to avoid the existing prohibition on stablecoin interest and yield. Proposed changes include language to strengthen the prohibition on stablecoin reward programs that mimic interest payments.
In an interview on CNBC’s Squawk Box, Nichols said bankers support establishing a regulatory framework for digital assets, but the Clarity Act ‘s current stablecoin language needs small changes to ensure the yield prohibition is upheld.
“We’re working with senators just to make sure that the language that they penned can also extend to (stablecoin issuer) affiliates and to exchanges, so there isn’t a massive dampening of economic activity,” Nichols said. “Congress’s intent here is simply what we’re helping them do. The bill is about 600 pages, and there are only two paragraphs that we’re suggesting tiny, surgical edits.”
The banking and crypto sectors can co-exist, he said.
“I think we can be the crypto capital of the world, and I think we can be the banking capital of the world,” Nichols said. “But there is a reason that they call it ‘payment stablecoin’ and not ‘deposit stablecoin.’ Congress views this as a very important payment innovation. I share that view, but they don’t view it as a deposit substitute, and the two things are different.”
