The Debate Over Stablecoin Interest Rates: Why is the Clarity Act Stalled? The Financial Boundaries of the US Dollar Are Being Redefined

The White House set the deadline for the CLARITY Act as March 1.
• The interim negotiations concluded without a final agreement, but this indicates that progress has been made.
Banks oppose stablecoin yields in order to protect deposits.
Cryptocurrency companies are seeking exemptions and flexibility.

The White House recently held a closed-door meeting on stablecoin regulation. Officials described the discussions as productive. However, no consensus was reached. Instead, the government set a deadline. Lawmakers are now under pressure to reach a compromise on the CLARITY Act by March 1st. Banks and cryptocurrency companies will face a severe test by then.

In the process of digital asset regulation in the United States, the Clarity Act was originally regarded as a historic milestone. It was expected to establish clear regulatory boundaries for digital assets, distinguish between commodity and security attributes, and provide an institutional framework for DeFi and stablecoins. However, as it entered a critical stage, the real controversy did not arise from token classification or decentralized protocols, but from a seemingly technical issue—whether stablecoins could pay interest.



On the surface, this appears to be a discussion at the product design level. In reality, it represents a power struggle within the dollar system regarding the boundaries of financial sovereignty and depository rights.

Once stablecoins can pay a stable return of 4-8%, their characteristics begin to resemble those of a "quasi-deposit." Users no longer hold just a payment instrument, but rather digital dollars with store-of-value and yield-generating functions. This structure will directly impact the deposit base of the traditional banking system, where deposits are the most core, lowest-cost, and most stable source of funds on a bank's balance sheet.

The key question is: if the US dollar can exist in the form of on-chain stablecoins and can circulate, transfer, and settle globally 24/7 without interruption, while also generating returns, will the role of banks as the "central hub of funds" in the financial system be weakened?

The banking industry's concern isn't about blockchain technology itself, but rather the decoupling of the US dollar from the banking system's asset and liability structure. Once funds flow into on-chain stablecoin containers, banks' liabilities will be substantially affected. This is why the controversy surrounding the interest function is so sensitive.

If the US ultimately bans stablecoins from paying interest, it may seem to restrict innovation in the short term, but it actually protects the stability of the traditional financial system. Stablecoins will be positioned as payment instruments, not stores of value. In this way, banks will retain their deposit function, while on-chain US dollars will play a role in clearing and cross-border circulation.

If the U.S. allows certain types of stablecoins to pay yields, such as those issued only by regulated banks, then the digital dollar system would be brought under banking regulation. This path is more likely a compromise acceptable to regulators—innovation exists, but must be done within the banking system.

Regardless of the outcome, this debate will profoundly impact the future of RWA structures.

RWA's clearing layer heavily relies on stablecoins. Tokenized bonds, on-chain fund shares, and asset-backed securities all require a stable on-chain US dollar as a medium for transaction and settlement. If the functionality of stablecoins is reduced, the entire on-chain financial module design will need to be redesigned. RWA will lean more towards institutional participation than open DeFi liquidity.



If regulators adopt a relatively open approach, allowing stablecoins to assume a yield-generating function within certain limits, then the on-chain dollar system will expand rapidly, and RWA's scale may experience exponential growth. This is because the incentive for funds to remain on-chain will increase, and liquidity will become more stable.

In the long run, stablecoins will not disappear, and RWA will not be phased out. What is truly changing is the structural boundary—the form in which the US dollar exists is gradually extending from bank accounts to on-chain addresses.
'
The final outcome of the CLARITY Act will not only concern the crypto market, but also the infrastructure of the US dollar over the next decade. This is a restructuring of the system, not a technical discussion.

For industry participants, the key is not predicting short-term fluctuations, but understanding the direction of institutional evolution at the clearing level. Whoever controls the entry of US dollars and defines the clearing rules holds the initiative in the future asset structure.

A calm assessment suggests that this is not a simple discussion about "whether or not interest should be allowed."
Rather, it is a redefinition of the dollar's financial infrastructure.



In the short term, the author personally prefers:
The US Congress allows stablecoins to exist, but restricts their yield features.

The reason is simple—regulators are unwilling to allow on-chain dollars to directly challenge the banking deposit system.

But the trend of history is already clear:
On-chain liquidation is irreversible.
RWA will not leave the scene.
Stablecoins will only become more institutionalized.

Interactive discussion: What do you think?
A. The US will eventually allow stablecoins to pay interest.
B. Revenue-generating functions will be strictly prohibited.
C. Regulation will be categorized by type (banking/non-banking).

Feel free to leave a comment and tell us your opinion.
A clear bill, regardless of its outcome, is a historical turning point.

GFM Reminder : This article is a compilation of industry research findings based on publicly available information and interim observations. It does not constitute legal or investment advice. Regulations in different regions are updated rapidly, and implementation guidelines may change depending on the regulatory body. For specific business applications, please conduct further due diligence, in conjunction with legal advice and local licensing requirements.