Banks' Efforts to Block CLARITY Bill May Accelerate Obsolescence

The banking industry's efforts to block the CLARITY bill may ultimately backfire, according to Miles Jennings, head of policy and general counsel at a16z Crypto.

Jennings argued that the GENIUS Act is already in force, accelerating on-chain movement of dollars and paving the way for other real-world assets to follow. He claimed that if the CLARITY bill stalls, the stablecoin deposit return structure banks want to stop would remain intact.

The controversy centers around regulation over compensation for holding stablecoins. Banking industry groups have called for changes to the bill, arguing that interest-like compensation should be more strongly banned due to concerns about stablecoin products siphoning off bank deposits and threatening local lending and economic activity in the United States.

Jennings views the banking sector's stance as a problem of internal incentive structures rather than strategic judgment. He believes that some institutions oppose DeFi reflexively because they see it as removing intermediaries, but strategic institutions view DeFi as a tool to provide customers with cheaper and more efficient services.