Progress in Crypto Market Structure Bill Negotiations
The ongoing discussions surrounding the crypto market structure bill, widely referred to as the CLARITY Act, are progressing, with the latest round of talks taking place at the White House. While a conclusive agreement has not yet been finalized, the negotiations signify a significant step forward, indicating potential resolution in the near future.
White House Leads the Charge in Crypto Deliberations
The meeting was described as a “significant advancement” by Patrick Witt, the Executive Director of the President’s Council of Advisers on Digital Assets. In a post on the social media platform X (formerly Twitter), Witt expressed optimism, stating, “We are nearing a resolution.” He emphasized that if negotiations continue in good faith, meeting the deadline is a realistic possibility.
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According to reports by Crypto In America journalist Eleanor Terrett, the latest session was smaller compared to previous ones, featuring representatives from Coinbase and Ripple. Notably absent were individual bank executives; instead, the banking industry was represented by trade associations such as the American Bankers Association, the Bank Policy Institute, and the Independent Community Bankers of America.
Terrett noted a shift in the dynamics of the meeting, with the White House adopting a more authoritative role compared to earlier discussions. Witt introduced a draft of legislative language, which became the focal point of the meeting. This proposed text addressed concerns from banks outlined in a document titled “Yield and Interest Prohibition Principles.” While acknowledging these concerns, the draft clarified that any limitations on rewards would be narrowly defined.
One of the critical aspects highlighted in the draft is the exclusion of yield payments on idle stablecoin balances, a significant aim for many crypto firms. The discussion has evolved to consider whether companies can offer rewards linked to specific activities rather than just account balances.
Proposed Daily Penalties in the Draft
A crypto industry insider suggested that banks’ objections may stem more from competitive pressures than the previously stated concern of massive deposit outflows. A representative from the banking sector mentioned that they are advocating for the inclusion of a formal study on deposit outflows in the bill. This study would examine how the proliferation of payment-focused stablecoins could impact traditional bank deposits over time.
The banking sector representative expressed optimism about a newly proposed anti-evasion provision in the draft. This provision would empower the Securities and Exchange Commission (SEC), the Treasury Department, and the Commodity Futures Trading Commission (CFTC) to ensure adherence to a ban on yield for idle balances. Civil penalties could escalate to $500,000 per violation per day, highlighting the stringent enforcement measures under consideration.
Terrett further reported that the next phase will involve bank trade groups briefing their members on the recent developments to evaluate the possibility of allowing certain forms of stablecoin rewards. Talks are expected to continue in the coming days, with a source familiar with the negotiations indicating that meeting the end-of-month deadline remains feasible, suggesting that while differences persist, there is growing momentum towards a compromise.
As of the latest data, the total crypto market capitalization stands at approximately $2.3 trillion, reflecting ongoing interest and investment in the sector.
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