Will the Digital Yuan Dethrone the Dollar? Scaramucci Warns of US “Yield Gap”
Scaramucci Claims Prohibition of Stablecoin Yield Threatens US Dollar’s Competitiveness Against Digital Yuan
Anthony Scaramucci, founder of SkyBridge Capital, has warned that the expanded prohibition on yield-bearing stablecoins in the CLARITY Act could weaken the US dollar’s standing.
Yield Ban and the Competitive Advantage of Digital Yuan
Speaking in response to the ban on crypto exchanges and service providers offering customers yield on stablecoins as per the CLARITY Act, Scaramucci stated, “The whole system is broken.”
He further questioned, “The banks don’t want competition from stablecoin issuers, so they’re blocking the yield. Meanwhile, the Chinese are issuing yield; what do you think the emerging countries will choose as a rail system—the one with or without yield?”
China Leads in Offering Yield on Stablecoins
The People’s Bank of China, China’s central bank, initiated the practice of allowing commercial banks to pay interest on digital yuan deposits in January.
That move positions the Digital Yuan as a yield-bearing central bank digital currency (CBDC), potentially offering it a competitive edge over US dollar stablecoins that are forbidden from offering yields under the CLARITY Act.
Coinbase CEO Warns of Undercutting the Dollar
Brian Armstrong, CEO of crypto exchange Coinbase, echoed similar sentiments, suggesting that prohibiting yield on US stablecoins could jeopardize the dollar’s competitive position in foreign exchange markets.
He stated, “I worry we are missing the forest through the trees in the US. Rewards on stablecoins will not change lending one bit, but it does have a big impact on whether US stablecoins are competitive.”
A core concern raised by Armstrong and other crypto industry executives is that the ban on stablecoin yield was imposed to thwart competition in favor of the incumbent banking industry. This point has been a subject of discussion, with fears that the regulatory framework may be influenced by protectionist inclinations.
Meanwhile, Bank of America CEO Brian Moynihan recently expressed concerns about potential bank deposit outflows due to stablecoins, which could result in reduced lending capacity for the banking industry.
