- The CLARITY Act stops yield on stablecoins and weakens the US dollar against the digital yuan.
- China’s digital yuan offers interest making it more attractive for global users than US stablecoins.
- Limiting yield on US stablecoins may reduce international adoption and shift markets to foreign currencies.
According to Scaramucci, the expanded prohibition on yield-bearing stablecoins in the CLARITY Act could reduce the US dollar’s competitiveness. Industry leaders warn this may give foreign digital currencies an advantage. The law prevents crypto exchanges and service providers from offering interest on stablecoins. Critics argue this creates an uneven playing field compared to China’s digital yuan.
China’s central bank allows commercial banks to pay interest on digital yuan deposits. This yield feature makes the digital yuan more attractive for international transactions. Experts suggest emerging economies may favor payment systems that offer returns. The US stablecoin framework cannot compete under the new rules.
Scaramucci Highlights Competitive Disadvantage
Anthony Scaramucci, founder of SkyBridge Capital, said the prohibition harms the dollar’s global position. He pointed out that US banks resist stablecoin competition by blocking yield. Meanwhile, foreign systems like the digital yuan provide interest, drawing more users. Earlier last year, JD.com and Ant Group proposed a yuan-pegged stablecoin to China’s central bank. Analysts warn that the US risks losing influence in emerging markets.
Industry voices note that stablecoins could offer efficient, interest-bearing alternatives for global transactions. The lack of yield in US stablecoins may drive international users toward China’s digital currency. Observers highlight a growing gap in competitiveness due to regulatory constraints.
Banking and Market Implications
Bank executives warn that stablecoins may shift large sums from traditional bank deposits. Bank of America projects up to $6 trillion in outflows if stablecoins grow further. Reduced deposits could limit banks’ lending capacity. Critics say the CLARITY Act prioritizes protecting legacy banks over maintaining dollar competitiveness.
The law may slow adoption of US stablecoins internationally. Experts emphasize that foreign digital currencies with yield could dominate emerging market transactions. The restriction on interest does not affect lending significantly but can influence which digital currencies gain global traction.
Regulatory Background and Debate
The CLARITY Act builds on the earlier GENIUS Act framework. Both aim to regulate US dollar stablecoins and maintain financial stability. In June, the U.S. Senate passed the GENIUS Act with a 68–30 vote. The new rules expand prohibitions on yield-bearing stablecoins. Critics argue that these restrictions favor traditional banks while weakening the US dollar’s position internationally.
Industry leaders stress the risk that foreign yield-bearing currencies will gain broader adoption. Observers note that regulatory caution may inadvertently reduce US influence in digital finance. The debate highlights a tension between domestic regulation and global competitiveness in the stablecoin market.
The expanded CLARITY Act prohibition underscores growing concerns over the US dollar’s ability to compete with digital currencies like the yuan. The law may shape future adoption trends in emerging markets.
