CLARITY HAS TWO TESTS FOR STABLECOIN YIELD — THE WEAKER ONE STARTS LATER

Eight banking trade groups wrote to Senators Thune and Schumer on September 14 asking for changes to the CLARITY Act. One of their requests reads like housekeeping and is the whole fight.

The bill stops a covered party from paying yield on a stablecoin balance “in a manner that is economically or functionally equivalent to the payment of interest or yield on an interest-bearing bank deposit.” The banks want those words replaced with “substantially similar.”

Equivalent means you have to show the reward works the same way as deposit interest. Similar means you only have to show it looks close. That swap decides who carries the burden in every argument that follows, and it is worth more to whoever holds it than any number in the bill.

Here is the part nobody is saying. The bill already contains both standards, in the same section.

The ban that applies on day one uses the demanding test. The regulations the Secretary of the Treasury may write later, after he finds that community banks have been damaged, use the loose one. He writes rules against payments made “in a manner that is similar to” deposit interest. Not equivalent. Similar.

So the drafters knew the difference. They put the hard test where it applies now and the easy test where it applies after the deposits have already moved. The banks are asking for the easy one up front. They were promised it either way, just later.

At the time of this writing, bitcoin was $78,776 at 1:38 PM ET on Coin Metrics.