TD Cowen says banks likely to lose stablecoin yield fight, but prolonged dispute could put crypto bill at risk

TD Cowen suggests that while banks are likely to lose the political battle against consumers receiving stablecoin yield, the ongoing conflict could delay the passage of the CLARITY Act, a broader U.S. crypto market structure bill. This dispute follows a proposed rule from the Office of the Comptroller of the Currency (OCC) implementing the GENIUS Act, which bans issuers from paying yield on payment stablecoins but leaves room for third-party arrangements to be scrutinized on a case-by-case basis.

Jaret Seiberg of TD Cowen argues the OCC's approach won't satisfy banks without an explicit ban on platforms paying yield. He cites concerns that the OCC might change its stance, that issuers could structure payments to evade the 'presumed illegal' standard, or that courts might overturn the rule, especially since the OCC lacks deference following the repeal of the Chevron doctrine.

Stablecoin yield provisions remain a major sticking point in negotiations for market structure legislation. JPMorgan CEO Jamie Dimon recently called for stablecoin yield payments to be subject to bank-style regulations to ensure a 'level playing field,' though analysts remain hopeful the crypto market structure bill could pass by mid-year.

(Source：The Block)