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Refusing to allow stablecoin yields would make the U.S. dollar less attractive than the yuan, Tianqiao Capital Founder Anthony Scaramucci explain.
His comments on January 16 came as banks are calling for a provision banning stablecoin rewards in expected cryptocurrency market structure legislation, and China has begun allowing interest payments on its digital yuan.
“The whole system is broken: banks don’t want competition from stablecoin issuers, so they block yields while issuing them in China, so what do you think emerging countries will choose as a rail system with or without yields?” Scaramucci said.
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The comments echo those of several cryptocurrency industry players in recent weeks.
“China decided to pay interest on their stablecoin because it benefits ordinary people and they see it as a competitive advantage,” Coinbase (NASDAQ: COIN ) CEO said. Brian Armstrong said earlier this month. “I’m worried that we’re missing the forest for the trees in the U.S. Stablecoin incentives won’t make any difference to lending, but it does have a big impact on whether U.S. stablecoins are competitive.”
The American Bankers Association has called for an end to stablecoin rewards, saying it stems from a loophole in stablecoin legislation enacted in July that prohibits issuers from paying interest to users. They warn that the incentives could lead to an exodus of deposits from community banks, hurting their ability to lend to small businesses.
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Cryptocurrency industry players refute claims of flight risk from deposits.
“There is no evidence to support the assertion that stablecoin rewards threaten community banks or their ability to lend,” the Blockchain Association said in a letter to the Senate in December. “For example, a Charles River Associates analysis of stablecoin adoption from 2019 to 2025 found no evidence of disproportionate deposit outflows from community banks. Additionally, it is difficult to reconcile the assertion that banks are truly subject to deposit constraints with the assertion that banks currently have approximately $2.9 trillion in bank reserve balances earning interest at the Fed rather than being used for lending.”
The Blockchain Association says the only reason to oppose stablecoin rewards is to protect the revenue of existing businesses.
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The debate over stablecoin yields is one of several key issues holding up the Digital Asset Market Clarity Act, the Senate’s proposed cryptocurrency market structure legislation. A draft of the bill, initially slated for a January 15 increase, proposed limiting stablecoin rewards to activities such as staking and lending. The bill is currently in limbo as the cryptocurrency industry attempts to negotiate more favorable terms.
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This article ‘The whole system is broken’: Anthony Scaramucci suggests resistance to stablecoin yields makes yuan more attractive than dollar originally appeared on Benzinga.com
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