Senate Urged to Close Crypto Loophole That Could Raise Farming Costs

The US Senate is being urged to stop a provision in the CLARITY Act that would give crypto exchanges an unfair advantage over community banks, potentially raising the cost of credit for farmers across America.

According to Patrick Rosenstiel, founder and director of Farmers for a Fair Deal, this loophole would allow crypto exchanges to pay customers 'interest' for parking stablecoins with them, calculated on how much the customer holds and how long they hold it. This would compete directly with bank deposits, pulling money out of local banks that rely on these deposits to make loans to farmers.

The CLARITY Act is a piece of crypto market-structure legislation currently sitting in the Senate, and most of its provisions are technical rulemaking that doesn't raise much excitement. However, this stablecoin interest loophole is a game-changer for rural communities that rely on community banks for loans to cover expenses during planting season.

The people who wrote this provision know what they're doing, Rosenstiel claims. Coinbase alone booked around $1.35 billion in stablecoin-linked revenue last year, and the carve-out protects this business model. The price for protecting it is paid by farm towns in South Dakota or Texas, where local banks suddenly have less to lend and operating notes cost more.