Scaramucci, Armstrong, Warn Stablecoin Yield Ban Hands China a Strategic Edge
- Anthony Scaramucci and Brian Armstrong warned that banning yield-bearing stablecoins in the CLARITY Act could drive emerging markets toward the digital yuan which already offers interest.
- Critics argue the yield restriction is a result of banking industry pressure to eliminate competition from stablecoin issuers despite the risk to the dollar’s global dominance.
- Bank of America leadership counters that allowing stablecoin yields could trigger six trillion dollars in deposit outflows and significantly reduce traditional lending capacity.
Anthony Scaramucci, as well as Coinbase’s CEO, Brian Armstrong, warned that banning yield-bearing stablecoins in the US CLARITY Act could weaken the appeal of dollar-linked stablecoins abroad by preventing issuers and platforms from offering interest-like rewards to users.
Scaramucci, founder of SkyBridge Capital, said the restriction reflects bank opposition to competition from stablecoin issuers, arguing that if other systems offer yield while US-regulated stablecoins cannot, emerging markets may prefer the higher-yield rail for payments and settlement.
The CLARITY Act would extend a yield restriction previously introduced in the GENIUS Act framework.
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China Offering Yield-Bearing Yuan
The debate is unfolding as China expands functionality around its digital yuan. The People’s Bank of China (PBC) has begun allowing commercial banks to pay interest on digital yuan deposits.
In that regard, Scaramucci said:
The whole system is broken: The Banks do not want the competition from the stablecoin issuers, so they’re blocking the yield, in the meantime, the Chinese are issuing yield, so what do you think the emerging countries will choose as a rail system, the one with or without yield?
Anthony Scaramucci, founder of SkyBridge Capital,
Armstrong echoed similar sentiment when he said banning stablecoin yields would make US stablecoins less competitive versus the digital yuan in foreign exchange and cross-border usage.
I worry we are missing the forest through the trees in the U.S. Rewards on stablecoins will not change lending one bit – but it does have a big impact on whether U.S. stablecoins are competitive.
Brian Armstrong. Coinbase’s CEO.
Meanwhile, banks have been raising the opposite risk, stating that stablecoins could drain deposits from the traditional system. As Crypto News Australia reported, Bank of America CEO Brian Moynihan said on an earnings call Wednesday that stablecoins could drive up to US$6 trillion (AU$9.18 trillion) in deposit outflows, potentially reducing banks’ lending capacity.
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The post Scaramucci, Armstrong, Warn Stablecoin Yield Ban Hands China a Strategic Edge appeared first on Crypto News Australia.
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