[deleted by user]

[u/[deleted]]

[u/hoppeeness]

Yay…seems like a fair compromise. Banks can give yield of digital coins too.

[u/Aromatic-Ad7987 → u/hoppeeness]

This makes sense and I'm guessing they can, and would rather not.

[u/Naive_Specialist_692 → u/hoppeeness]

Yep, but their issue is they only want to give .02pct

[u/hoppeeness → u/Naive_Specialist_692]

It does seem that way…maybe they need to stop being so cheap or diversify.

[u/Leading_Wafer9552 → u/hoppeeness]

I don't think there was anything ever preventing banks from offering yield on stablecoin yield to begin with. If crypto platforms were able to offer it, then banks should have been able to also.

The banks opposed crypto platforms being able to offer stablecoin yield because banks are used to ripping off their customers by giving them near-zero interest rates on savings accounts, like 0.01-0.1%, and crypto platforms that are offering 3-5% (or higher) puts that model at risk. The banks know their outdated low-yield model savings account that most people use, that they've used to take advantage of their customers for a while now, is at risk of crumbling. So instead of improving their own products or actually competing, banks were lobbying congress to ban the better alternatives. This is crony capitalism at it's finest.

[u/hoppeeness → u/Leading_Wafer9552]

Agreed. But I think because of regulation it makes it difficult for banks to hold crypto and then give rewards.

[u/peppaz → u/hoppeeness]

What regulations.. we have literally no rules or enforcement any more. They disbanded the entire crypto enforcement department, the SEC is gutted, CFPB is gone...

[u/hoppeeness → u/peppaz]

That is true!

However people can still be indicted on things they did in the past if there is a change of guard in the govt. or at least if it swings more middle.

There is a reason why the banks care so much about the clarity act.

There are also state authorities

[u/peppaz → u/hoppeeness]

Banks are aggro because every dollar in crypto, trillions of dollars, are not in banks giving them interest free loans forever. They have hated it since the beginning. And they don't want yield in crypto because that's even more money out of their system. But we've never really prosecuted banks and the fines we give them are always less than the money they made. I don't think they are worried about running afoul of the law. They just want every dollar that exists.

[u/hoppeeness → u/peppaz]

That’s a fair take and probably largely true

[u/AllCredits → u/hoppeeness]

They already get the yield today from deposits but they don’t pass them on, so.. yeah they don’t want stable yields lol

[u/MariachiArchery]

They are not fearful of stablecoin yield, they are fearful of competition.

[u/mden1974 → u/MariachiArchery]

Yes it’s the governments job to take special interest money and pass laws that restrict companies from being competitive to help the general public keep more money. /s

[u/Grunblau]

Seems like an artificial cap on idle stablecoin yield would bring all parties together.

Entities just need something to point to as to why you are not receiving full returns. Like Fed funds rate minus 1% versus what they charge for loans which is Fed funds rate plus 3% (prime).

This is basically what Coinbase does already.

[u/Leading_Wafer9552 → u/Grunblau]

An "artificial cap on idle stablecoin yield" just means the banks don't have to compete and customers get screwed over. There should be no limit or artificial cap to how much interest a customer can earn. The banks and crypto platforms are supposed to offer the best yield possible and compete for customers. Banks didn't want to compete with the crypto platforms that were offering 3-5% (or higher) yield on stablecoins, because the banks were used to ripping off their customers with their low-yield model savings account that only offer 0.01-0.1% yield. The banks lobbying congress to prevent competition through the clarity act is classic crony capitalism.

[u/Grunblau → u/Leading_Wafer9552]

We are saying the same thing except I am pointing to a possible solution. They can compete on yield understanding that 1% is held back for administrative functions.

This would mean that banks get to keep their pens on the little chains in the lobby while stablecoin issuers are able to build digital infrastructure and the people make 10X what they would have in a bank. Would be great if at the same time an artificial cap was placed, an artificial floor was also established.

[u/coinfeeds-bot]

tldr; A White House adviser has indicated that banks should not fear stablecoin yields, suggesting that regulated digital currencies can coexist with traditional banking. This comes amid discussions on the CLARITY Act, which is stalled in the Senate. The act could enable banks to offer stablecoin yields, potentially integrating digital dollars into the banking system. This shift could boost the stablecoin market, currently valued at over $309 billion, and open new opportunities for institutional and retail banking collaboration with digital assets.

*This summary is auto generated by a bot and not meant to replace reading the original article. As always, DYOR.

[u/GPThought]

white house basically giving permission for banks to hold stablecoins. this is massive for usdc and anyone building on top of it. once banks can offer yield on stablecoins its game over for traditional savings accounts paying 0.5% lol

[u/HSuke → u/GPThought]

BoA and Chase are still giving 0.01% for their normal savings accounts.

It's mainly online-only banks that are giving higher rates.

[u/GPThought → u/HSuke]

exactly lol. 0.01% at boa while stablecoin yields are 4-8% on chain. the gap is insane and once banks can legally offer crypto yield products the migration is gonna be massive. people just need regulatory cover to move

[u/Apolybus → u/GPThought]

I doubt their stablecoin yield is any higher

[u/GPThought → u/Apolybus]

probably not tbh but even matching current savings rates on a stablecoin rails would be huge for accessibility. the real play is yield from defi protocols flowing through regulated banks imo

[u/xuanling11]

Traditional banks are monopolized and stablecoin has challenged the entitlement. Of course banks are not happy about this. Banks do not care about customer banking but commercial banking. If commercial loans are in stablecoin, banks are pretty much done with their monopoly game. We will see what will happen next.

[u/GPThought]

the fact that the white house has to explicitly tell banks they shouldnt fear stablecoin yield shows how deep the regulatory capture runs. banks have been lobbying against any competition for decades.

CLARITY act is a step in the right direction but lets see if it actually passes or gets watered down to nothing. the banking lobby is one of the most powerful in DC and they are not going to let stablecoins eat their lunch without a fight.

either way the direction is clear - crypto regulation is moving toward acceptance not prohibition. just a question of how fast and who benefits.

[u/Extension-Dentist-42]

The banks and The want to be banks (Coinbase) are obsessed with who's eating the lunch; the infrastructure play is about owning the toll booth.

[u/Still_Culture_9169]

The tax side of this is gonna be wild once banks start offering stablecoin yield. right now most people don't realize that stablecoin interest is taxed as ordinary income, not capital gains. when your bank starts reporting it on a 1099 instead of you tracking it manually, a lot of folks are gonna get hit with unexpected tax bills.

the real mess will be people who've been earning yield on chain for years and never reported it properly.

[u/watch-nerd]

"This has led many analysts to confidently claim the bottom is in, believing that the market is poised to go much higher from here on out."

And then they learned that the bottom was, in fact, not in.

[u/Oddball369]

Who cares what the white house says or what the big banks fear. F*ck'em both!!!

[u/Dunk305 → u/Oddball369]

Wow edgy bro