The recent adoption of the American Engineering Act has been largely celebrated as a major step for the adoption of stables, but a key provision can limit the attraction of digital dollars compared to monetary market funds, which raises whether the authors of the bill have been influenced by the pressure of the banking industry to restrict the performance floors.
The Genius Act expressly prohibits issuers from offering performance stages, effectively preventing retail and institutional investors from gaining interest on their digital funds.
For this reason, Temujin Louie, CEO of Crosschain Interoperability Protocol Wanchain, warned against the consideration of legislation as an unskilled victory for industry.
“In a vacuum, it can be true,” Louie said at Cointelegraph. “But by explicitly prohibiting stable issuers from offering the yield, the Act on Engineering actually protects a major advantage of the money market funds.”
As indicated by Cintelelegraph, the funds of the monetary market, or mmfs, emerge as the response of Wall Street to Stablecoins, in particular when they are issued in token form. The JPMorgan strategist, Teresa Ho, noted that the MMF tokenized could unlock new use cases, such as serving as a margin guarantee.
Louie agrees, claiming that “tokenization allows funds from the monetary market to adopt the speed and flexibility that make the stablecoins unique before, without sacrificing security and regulatory monitoring”.
Paul Brody, world leader in blockchain at EY, told Cintelegraph that the MMF tokenized and token deposits “could find a new important opportunity”, in particular in the absence of yield on Stablecoin farms.
“Monetary market funds can work and look much like stable for end users, but with the difference they offer a yield,” said Brody.
According to Ey’s Brody, the availability of yield could be a decisive factor between mmf token and stablecoins. However, he noted that stablecoins keep certain advantages:
“Stablecoins are authorized as an active, which means that they can easily be placed in the DEFI services and other ONCHAIN financial services without complicated management of access and transfer controls. If the tokenized monetary market funds have many restrictions that prevent such use, it is possible that the attractive attraction is not sufficient to compensate for additional operational complications. ”
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The banking sector on the debate on stables
The prohibition of the law on the genius on stable -to -yield stables was not surprised, Cointelegraph previously reporting that the banking lobby seems to have exerted a significant influence on the current political debate around the stablecoins.
In May, the NYU Blockchain Professor and Consultant, Austin Campbell, cited sources in the banking sector, revealing that financial institutions are actively lobbying to block stable -to -interest stable to protect their longtime business model.
After decades of supply of depositors in minimal interest, the banks feared that their competitiveness would be threatened if the stabbing issuers were authorized to offer a return directly to the holders, Campbell said.
However, digital assets provoking performance exist in the United States, although under the apparent competence of securities regulations. In February, Securities and Exchange Commission approved the country’s first stable of the country, issued by the markets. The token, called YLDS, offered a yield of 3.85% at launch.
In relation: The genius establishes new Stablecoin rules but remains vague on foreign issuers