U.S. regulatory tightening is raising alarm among crypto executives who see stablecoin competitiveness as a key pillar of the dollar’s global role.
CLARITY Act restrictions and yield prohibition
According to Anthony Scaramucci, the expanded ban on yield-bearing stablecoins in the CLARITY Act risks weakening the U.S. dollar against China’s digital yuan. The legislation prevents crypto exchanges and other service providers from offering interest on U.S. dollar stablecoins, a move critics say tilts the field in favor of foreign digital currencies.
Scaramucci argued that the prohibition on stablecoin yield makes the U.S. dollar less competitive than the digital yuan. Moreover, industry leaders warn that limiting interest on these assets could drive international users toward alternatives that provide returns on their holdings, especially in cross-border payments.
Digital yuan yield and global appeal
China’s central bank currently allows commercial banks to pay interest on digital yuan deposits, creating a clear yield advantage. This interest feature makes the digital yuan more attractive for international transactions, particularly for users and institutions seeking both speed and modest returns on balances.
Experts suggest that, over time, emerging economies may favor payment systems that offer some form of yield on digital balances. However, under the CLARITY framework, the U.S. stablecoin model cannot match this feature, leaving American-issued digital dollars at a disadvantage in global markets.
Scaramucci highlights competitive disadvantage
Speaking on the broader implications, Anthony Scaramucci said the yield prohibition undermines the dollar’s global position. He claimed U.S. banks are resisting stablecoin competition by pushing rules that block interest, while foreign systems like the digital yuan use yield to attract more users and liquidity.
Earlier last year, JD.com and Ant Group put forward a yuan-pegged stablecoin proposal to China’s central bank, underscoring Beijing’s focus on expanding its digital currency ecosystem. Analysts warn that, if this trend continues, the U.S. could lose influence in emerging markets where flexible digital payments are rapidly gaining traction.
Industry voices add that stablecoins could have become efficient, interest-bearing tools for international settlements. However, the lack of yield in U.S.-regulated stablecoins may nudge global users toward China’s digital currency and other foreign alternatives, widening what observers see as a structural gap in stablecoin competitiveness.
Banking system and market implications
Bank executives have long cautioned that large-scale stablecoin adoption might draw substantial funds away from traditional bank deposits. Bank of America has projected potential outflows of up to $6 trillion if stablecoins continue to grow and offer features that rival conventional accounts.
Such a shift could reduce deposit bases and limit banks’ capacity to lend, affecting credit creation and profitability. Critics argue the CLARITY Act’s strict stance on yield effectively shields legacy banks from direct competition, even if it means sacrificing the U.S. dollar’s long-term appeal in digital finance.
Moreover, the law may slow U.S. stablecoin international adoption, just as foreign digital currencies start to scale. Experts emphasize that yield-bearing digital units could dominate transactions in emerging market payment systems, where users are sensitive to both cost and return on funds held in digital form.
Regulatory impact on dollar and global reach
Supporters of the CLARITY Act insist the rules are necessary to protect financial stability and avoid unregulated interest-bearing products tied to the dollar. That said, critics counter that the restriction on stablecoin yield does little to change core lending risks while significantly shaping which digital currencies gain global traction.
The CLARITY Act builds on the earlier GENIUS Act framework, which also targeted U.S. dollar stablecoins. In June, the U.S. Senate passed the GENIUS Act with a 68–30 vote, signaling strong bipartisan support for tighter oversight. The new law extends those principles by expanding the bans on interest-bearing stablecoins.
Industry leaders argue these limitations ultimately favor traditional banks while weakening the U.S. dollar’s position in the race against foreign digital currencies. Moreover, observers warn that regulatory caution at home may unintentionally reduce U.S. influence in digital finance abroad, as other countries experiment more aggressively with yield-bearing models.
Debate over digital currency leadership
Policymakers now face a difficult balance between safeguarding domestic financial stability and preserving global demand for dollar-linked digital assets. While regulators focus on risk, market participants stress that foreign currencies with interest, such as China’s digital yuan, could steadily gain share in cross-border flows.
The expanding CLARITY Act prohibition underscores deepening concerns over the U.S. dollar’s ability to compete with state-backed digital currencies like the yuan. In particular, analysts believe the law could influence future adoption patterns in emerging markets, shaping which units become default choices for digital trade and savings.
In summary, the clash between strict U.S. rules and more flexible foreign frameworks may redefine leadership in the next phase of global digital money, with yield features emerging as a crucial differentiator.
Source: https://en.cryptonomist.ch/2026/01/19/stablecoin-competitiveness-clarity-act/
