Banking Groups, Including Bank of America, Push 1% Cap on Stablecoin Rewards
The Senate Banking Committee’s crypto-asset bill would authorize national banks to issue dollar stablecoins under FDIC insurance while capping user rewards at 1% APY. Crypto advocates warn that the yield limit, compared with 5% offerings on DeFi platforms, could stifle competition and innovation.
1. Senate Bill Provisions
The proposed legislation by the Senate Banking Committee would grant national banks authority to issue US dollar stablecoins under FDIC coverage and require issuers to maintain 100% reserve holdings in segregated accounts, while limiting customer reward rates to a maximum of 1% annual percentage yield.
2. Banking Groups’ Position
Major banking associations, including Bank of America, argue that a 1% cap on stablecoin rewards is necessary to protect depositors, prevent risky yield chases, and ensure parity with traditional savings products under Federal Reserve oversight.
3. Crypto Advocates’ Counterarguments
Industry groups and digital asset advocates counter that the 1% limit falls far short of the 5% to 7% APY available on decentralized finance platforms, warning that overly restrictive yields could drive users away from regulated stablecoins and undermine market competition.