Banks' Anti-CLARITY Push Could Sink Their Own Ship

a16z's Miles Jennings argues that banks fighting the CLARITY Act are inadvertently accelerating their own obsolescence. He believes that blocking the bill will leave in place the stablecoin yield arrangement that banks have lobbied hardest to stop.

The GENIUS Act, already law, has 'opened the floodgates for dollars to move onchain,' according to Jennings, and other real-world assets will follow whether or not CLARITY passes. Without the market-structure bill, crypto intermediaries will continue to pay yield on stablecoin deposits under GENIUS.

Jennings thinks that CLARITY offers Traditional Finance (TradFi) a lifeline by letting institutions participate in the onchain economy and even enabling them to use permissionless DeFi. Without it, 'many institutions will be sidelined.'

The six banking trade groups, the American Bankers Association, Bank Policy Institute, Consumer Bankers Association, Financial Services Forum, Independent Community Bankers of America, and National Bankers Association, have repeatedly asked Senate leaders to tighten the prohibition on interest-like rewards for holding stablecoins.