Stablecoin Threat Theory Bankruptcy: Banks' boycott of the Clarity Act is a misjudgment

According to Woofun AI, the US Senate is advancing the “Clarity Act” to establish digital economy rules and federal regulatory frameworks and clarify compliance standards for exchanges, brokers, issuers, and intermediaries. The move aims to build a more innovative and competitive financial system, but it has triggered strong opposition from the American Bankers Association and other groups. Its core anxiety is that the bill gives cryptocurrency companies an unfair competitive advantage and allows them to provide similar deposit interest rewards to stablecoin users, which in turn causes funds to flow from bank accounts to stablecoins, and be exhausted for use in mortgages, agricultural projects, and small scale Deposit basis for corporate financing.

This narrative, which blames the decline of community banking on the rise of stablecoins, although dramatic in political discourse, actually conceals more complex regulatory games and interest structures. The banking community's fear of losing credit support stems more from defensive responses to regulatory uncertainty and new entrants' challenges, rather than rational deductions based on empirical data.

The refutation of the deposit loss theory must be based on the dual dimensions of legal details and empirical data. The GENIUS Act clearly prohibits stablecoin issuers from directly paying interest or yield to holders. Currently, the focus of controversy is limited to indirect reward mechanisms provided through exchanges, related institutions, and other intermediaries.

According to data compiled by Woofun AI, the White House Economic Advisory Committee's estimates based on benchmark assumptions showed that even if stablecoin yields were banned, the total bank loan size only increased by 0.02%, and the increase in community banking was only 0.026%. Other empirical studies also did not find that the popularity of stablecoins had a significant impact on the size of community bank deposits, let alone hit the bottom line of financial stability.

This data completely dissolves the panic narrative that “stablecoins disrupt the banking industry.” However, the political game surrounding the “Clarity Act” shows an absurd misalignment: progressives who have long criticized “too big” financial institutions to try to maintain the competitive advantage of traditional banks; Republicans, who have always advocated open markets, tend to limit the development of cryptocurrencies due to concerns that new entrants compete too fiercely with traditional banks.

This reversal of positions reveals a deep conflict of interests. It is worth noting that Wall Street did not form a unified opposition. Giants such as BlackRock (BLK.US), Fidelity, and Goldman Sachs (GS.US) all supported the bill because of their keen insight that blockchain is rapidly being integrated into the financial system. On September 1, 21 financial institutions, including Bank of America (BAC.US), Citibank (C.US), and Deutsche Bank (DB.US), announced plans to establish companies to issue US dollar stablecoins. They are expected to launch in the first half of 2027, covering the fields of tokenized deposits, escrow services, trading operations and infrastructure, and will invest billions of dollars.

This action shows that traditional banks are not passive victims, but active planners.

Regulatory uncertainty is the sword of Damocles hanging over traditional banks. In the absence of congressional legislation, digital asset policies will depend on temporary decisions by regulators and the presidential administration, and rules may change frequently as the government changes. Take the Monetary Authority as an example. Just seven months after submitting the application, it approved the initial authorization of the World Liberty Trust Company related to World Liberty Financial under the Trump family in August. Such a quick approval raised questions about political interference and highlighted the arbitrariness and unpredictability of administrative supervision.

For banks planning to invest heavily in the stablecoin sector, the risk of such regulatory policy changes every four years far outweighs competition from fintech startups. Traditional media cannot stop internet disruptions. Similarly, if the US does not immediately enact regulatory laws and relinquish dominance to other countries and overseas institutions eager to take a leading position in the global financial field, America's financial leadership will face erosion. Over the years, regulatory ambiguity has become a protective barrier for the cryptocurrency industry, enabling startups and overseas institutions to take on legal and regulatory risks that cannot be tolerated by strictly regulated financial institutions, leaving many large financial companies out of the situation.

The Clarity Act will remove this barrier and force the industry to compete under clear rules. Traditional financial institutions with huge capital, hundreds of millions of customer relationships, global business networks, advanced risk management capabilities, trusted brands, and decades of regulatory experience will give full play to their advantages under clear rules. This is far more serious for cryptocurrency companies than facing barbaric growth under vague regulation. Critics see the bill as deregulation or transfer of benefits; on the contrary, clear rules would introduce fierce competition from the world's most powerful financial institutions. This is the market purification mechanism that legislators expect.

The history of financial innovation has never been a zero-sum game where new technology has destroyed existing enterprises. From Telegram to the Internet, technological evolution has always promoted the progress of the banking industry, and forward-looking financial institutions have achieved a leap forward by attracting new customers, developing new products, and opening up new markets. Blockchain is no exception. Existing financial institutions face a choice: maintain the status quo or lead innovation. If Bank of America (BAC.US) is confident that it can compete — and this confidence should exist with these huge advantages — then it should fight for the Clarity Act to be passed rather than boycotted. Historical experience shows that those who resist change will eventually be eliminated, and those who embrace the rules will establish an advantage. In the long run, the biggest beneficiaries of the Clarity Act are not cryptocurrency companies, but traditional banks that can use a clear regulatory framework to strengthen their position and expand their business. This is a critical transformation window that traditional financial institutions are once again facing after the Internet reshaped the financial landscape. Only active integration rather than passive defense can dominate the new round of financial competition.