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WSJ: Banks Protest High-Yield Tokens as Crypto Regulation Dispute Continues to Escalate in WashingtonBlockBeats News, January 16, according to The Wall Street Journal, the crypto industry and the banking sector are engaged in an intense lobbying battle over digital tokens that can offer annualized yields. This struggle could undermine legislative efforts originally aimed at integrating cryptocurrencies into the mainstream financial system. The core of the debate centers on what crypto companies call “rewards”—annualized returns distributed periodically based on the proportion of assets held by investors. This mechanism is particularly common among stablecoins. From the banks’ perspective, when certain exchanges offer about 3.5% yield on stablecoins, it is essentially similar to high-yield deposits, but without having to comply with the strict regulatory requirements that banks face when taking public deposits. Banking organizations have therefore sent numerous letters to lawmakers, warning that such “yield-bearing stablecoins” could deal a devastating blow to small and medium-sized banks in the United States. By comparison, the current national average interest rate for regular interest-bearing checking accounts in the U.S. remains below 0.1%. This debate is one of the reasons why the Senate Banking Committee postponed its scheduled Thursday vote on the crypto market structure bill. JPMorgan, Citigroup, and other large banks are resisting stablecoin rewards on one hand, while on the other, they are also developing their own crypto products and partnership plans. Some banks, including Bank of America, are considering whether to issue their own stablecoins. Analysts say that the withdrawal of support for the bill by a certain exchange could put the bill’s prospects at serious risk, even though other crypto companies still express support. This dispute highlights a tension: on one side is the rapidly growing new force of the crypto industry in Washington, actively leveraging its increasing lobbying influence; on the other side is the traditional banking sector, which has maintained close ties with Congress for decades. The U.S. Treasury estimated last year that stablecoins could siphon off up to $6.6 trillions in deposits from the U.S. banking system, partly due to the “yield” mechanism offered by stablecoins. By comparison, according to the latest Federal Reserve data, as of early January, the total deposits in U.S. commercial banks were about $18.7 trillions. The U.S. government provides insurance for deposits up to $250,000 per account, but at the same time, imposes strict regulations on banks’ operations and financial soundness.