CLARITY Act Sparks Controversy: Banning Stablecoin Interest Could Impact the US Dollar and Trigger Capital Outflows

Inside Capitol Hill, a huge wave is rising around a bill called the “CLARITY Act.” One of the core provisions of the bill is to prohibit cryptocurrency exchanges and service providers from offering stablecoin yields to users.

SkyBridge Capital founder Anthony Scaramucci issued sharp criticism, believing this would put the US dollar at a disadvantage in competing with China’s digital renminbi.

01 The Bill Controversy

The cryptocurrency industry is facing an unprecedented regulatory showdown. The focus of this confrontation is the “CLARITY Act,” which could reshape the global digital financial landscape.

A key clause in the bill has sparked significant controversy: banning cryptocurrency exchanges and other service providers from offering stablecoin yields to customers. This regulation is seen as an extension of the earlier “GENIUS Act” ban.

Scaramucci candidly stated, “The entire system is collapsing.” He criticized the bill as being designed to protect traditional banking interests rather than promote innovation.

Banking representatives, however, presented a different argument. US Bank CEO Brian Moynihan warned that if stablecoins are allowed to offer yields, it could lead to a drain of up to $6 trillion in bank deposits.

02 Geopolitical Financial Competition

Behind this debate lies a deeper layer of geopolitical financial competition. Scaramucci pointed directly at the core issue, asking:

“Banks don’t want stablecoin issuers to compete with them, so they block yield sharing. China is issuing stablecoins that can generate yields, so which system do you think emerging countries will choose?”

This question reveals the power struggle surrounding the stablecoin yield ban and its potential threat to the dollar’s global dominance.

Since January 2026, the People’s Bank of China has allowed commercial banks to pay interest on digital renminbi deposits. This policy shift has given digital renminbi a structural advantage in the competition with US dollar stablecoins.

For holders, earning passive income on digital currencies is obviously more attractive than zero yields, especially in a global environment where interest rates remain relatively high.

03 Concerns in the Banking Sector

Traditional banking is deeply worried about the rise of stablecoins. Moynihan clearly expressed his concern: “If market structure rules remain lenient, stablecoins that generate yields could lead to $6 trillion in deposit outflows.”

This number is roughly one-third of total US bank deposits. If true, it would deal a catastrophic blow to the banking business model.

The core of banking is to attract deposits and lend money to earn interest rate spreads. When large amounts of deposits flow into stablecoins, the pool of funds available for lending shrinks sharply, forcing banks to raise deposit rates to compete for funds, squeezing profit margins.

The Community Bankers Council of the American Bankers Association has submitted a joint letter to the Senate, demanding to close the loophole that allows stablecoins to pay interest indirectly through exchanges in the “Crypto Market Structure Bill” under review.

The banking sector bluntly pointed out, “Such arrangements are turning exceptions into rules, making bans effectively meaningless.”

04 Crypto Industry Counterattack

In response to the crackdown from traditional banks, the crypto industry has launched a strong counterattack. The Blockchain Association and the Crypto Innovation Committee believe that banks only want to maintain their monopoly over low-efficiency, low-interest-rate systems.

Reward mechanisms that help consumers preserve purchasing power in inflationary environments are market innovations, not regulatory evasion.

Brian Armstrong, CEO of the largest compliant cryptocurrency exchange in the US, issued a more direct warning:

“I worry that in the US, we only see the trees but not the forest. The reward mechanisms for stablecoins won’t affect lending, but they will seriously impact the competitiveness of US stablecoins.”

He further pointed out that banning stablecoin yields doesn’t truly protect banks, as funds will still flow into other yield-generating digital assets, which may no longer be denominated in USD.

Armstrong even elevated the issue to an international strategic level: “If US legislators excessively ban USD stablecoins from generating yields, it will weaken the digital competitiveness of the dollar and hand the leading edge over to China’s digital renminbi.”

05 Market Performance and Data

While regulatory debates are intense, the cryptocurrency market also shows a complex and volatile trend. Some industry leaders are optimistic about the market outlook in 2026.

Scaramucci and Mike Novogratz, CEO of Galaxy Digital, predict that influenced by the Federal Reserve’s easing policies and the weakening of the dollar globally, the crypto market could see a significant rebound in 2026.

Scaramucci observed, “Search queries for Bitcoin are near historic lows… that makes me optimistic.” He believes market dynamics will largely depend on macroeconomic conditions.

Meanwhile, the native token of GateToken, a leading global cryptocurrency exchange, has recently performed as follows:

Data as of January 19, 2026, for GateToken

06 The Strategic Dilemma of Dollar Hegemony

Scaramucci pointed out a deeper strategic issue: in the context of US-China technological and financial competition, banning stablecoin yields might be a strategic mistake for the US.

The dollar’s global dominance was established after the Bretton Woods system, relying on its leading role in international trade settlement, foreign exchange reserves, and commodity pricing. But this position is not eternal; it must adapt to technological and market changes.

In the era of digital currencies, the rules of monetary competition are being rewritten. Traditionally, a currency’s attractiveness depended on the issuing country’s economic strength, political stability, and financial market depth.

Today, user experience, technological convenience, and yield potential are new dimensions of competition. If USD stablecoins fall behind China’s digital renminbi in these aspects, the dollar’s global position could face real challenges.

More critically, overly strict regulation could stifle innovation and lead to capital outflows. If the US enforces harsh rules on stablecoins, related projects might relocate to jurisdictions like Singapore, Switzerland, or the UAE.

These regions are actively competing to become global crypto financial centers, offering more friendly regulatory environments. Once the issuance and operation of USD stablecoins move overseas, US control over this market will be greatly weakened.

Future Outlook

The Crypto Innovation Committee believes that banks only want to maintain their monopoly over low-efficiency, low-interest-rate systems. Scaramucci’s warning still echoes in Washington: “Banks don’t want stablecoin issuers to compete with them, so they block yield sharing.”

Meanwhile, on the other side of the world, digital renminbi wallets are quietly generating 0.05% annual interest. This silent currency war may determine the power structure of the global financial system for decades to come.

As global funds seek the “path of least resistance,” overly protective regulations favoring traditional interests could ultimately cause the dollar to lose its competitive edge in the digital age. The scales of history are waiting for the next push.