White House held a third meeting on stablecoin yield. The draft "Clarity Act" would ban yield to reduce deposit flight; Coinbase pulled support. Read: https://www.ledgerinsights.com/white-house-stablecoin-yield-fix-why-the-wording-matters/
Wording matters: a blanket ban on "yield" sweeps up transparent retail options. Coinbase currently offers ~3.5% on USDC; removing that pushes returns into opaque venues, reduces on‑chain liquidity, and punishes compliant custodians.
Don’t ban concepts — regulate mechanics. Target "deposit‑like" features: explicit redemption guarantees, maturity transformation, commingled uninsured funds. Require audited reserves, proof‑of‑liabilities, and clear customer disclosures.
Takeaway: surgical drafting reduces bank‑run risk without killing on‑chain capital formation. Regulators should legislate guarantees and disclosures. Builders should implement auditable reserves and UX that spells out risks now.
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