a16z Policy Head and General Counsel Miles Jennings: No Specific Evidence Seen for Stablecoin Rewards Causing Deposit Withdrawals
Miles Jennings, a16z crypto policy head and general counsel, stated in an interview that some banks do not want the "Cryptocurrency Market Structure Bill" (CLARITY) to become law; he has yet to see specific evidence for banks' claims that "stablecoin rewards will lead to deposit outflows."
He pointed out that relying solely on actions from the SEC cannot provide founders with certainty that spans presidential terms; if the approach of "enforcement instead of legislation" from Gary Gensler's era continues, crypto entrepreneurial activities may still be pushed out of the U.S. He previously wrote that the GENIUS Act has come into effect and opened the door for dollars on-chain, while blocking CLARITY allows intermediaries to continue paying yields on stablecoin deposits under GENIUS—this is precisely the outcome that banks are lobbying to prohibit. Six industry associations, including the American Bankers Association and the Bank Policy Institute, are calling for tighter restrictions on "interest-like rewards," claiming they will siphon off deposits that support small businesses, mortgages, and agricultural loans. JPMorgan CEO Jamie Dimon has publicly called for stablecoins to be subjected to the same scrutiny and identity verification as banks.
The Senate Republicans have released a revised text of about 630 pages, just days before the procedural vote on September 15. Cynthia Lummis stated that over 114 amendments proposed by Democrats have been incorporated, including a definition for "decentralized finance trading protocols": if individuals or collaborative groups have the authority to directly or indirectly control or materially change the protocol's functions, operations, or consensus rules, they must register with the Commodity Futures Trading Commission (CFTC), which will write rules in conjunction with the Treasury, while also adhering to the Bank Secrecy Act. The decentralized finance provisions have been narrowed to spot and cash digital commodity trading in response to concerns from indigenous tribes regarding prediction markets, and to clarify the digital asset activities that credit unions may engage in.
The ethical provisions have not undergone significant changes and will still be enforced by the Department of Justice, rejecting proposals from Democrats and Republican Senator Thom Tillis to grant state attorneys general more authority and establish stricter conflict of interest prohibitions. Issues surrounding stablecoin yields, illegal finance, and conflicts involving the Trump family's crypto assets remain negotiation obstacles. The Republicans currently hold 53 seats, and advancing the procedure requires 60 votes; reports indicate that no Democratic senators have co-sponsored the revised draft as of its release.
In terms of market mechanisms, the obstructionists are the banking lobby groups wanting to maintain low-interest deposits, while the proponents are exchanges, stablecoin intermediaries, and venture capitalists seeking legislative certainty. The driving force is the voting window on September 15, not on-chain data. Funds will continue to follow GENIUS's third-party rewards until legislation is passed; once CLARITY is approved, the scope of rewards will be written into the ban, allowing institutions to enter the on-chain market. Beneficiaries will be deposit institutions that can keep dollars on their balance sheets or crypto intermediaries that can write compliant pathways into the legislation—depending on whether the 60 votes can be secured.
Source: Public Information
ABAB AI Insight
Miles Jennings characterizes the banks' lobbying as self-accelerating obsolescence: GENIUS has already allowed dollars on-chain, while CLARITY is the entry point for banks into the unlicensed market. Blocking the market structure bill allows stablecoin intermediaries to continue paying yields on deposits, while the banks' desired ban ultimately falls short. The six industry associations are not asking for "further study" but rather to close off interest-like channels, as demand deposits are the raw material for loans. Dimon's call for equivalent regulation essentially aims to drag stablecoins into the same anti-money laundering and capital constraints, rather than simply debating rewards for digital assets.
The capital pathways split into two legislative channels. GENIUS prohibits the issuance side from paying interest to holders; CLARITY attempts to extend the ban to nearly all digital asset intermediaries while granting banks and credit unions entry qualifications. Venture capitalists supporting founders seek legislative certainty that spans presidential transitions, rather than relying on the next SEC chair's enforcement memos. The enforcement substitute for legislation during Gensler's tenure has already pushed some projects and legal fees offshore. As an investor, a16z's legislative certainty directly impacts whether portfolio companies can keep tokens and legal entities in the U.S.
In comparison to the 1933 Securities Act incorporating state blue sky laws into federal registration: the market structure bill aims to delineate roles for the SEC and CFTC, rather than simply penalizing another ICO. The 2010s reform of money market funds similarly revolved around "will it siphon off bank deposits?" The industry phase is that the bill has already reached 630 pages, ethical provisions remain stalled at the Department of Justice, and the procedural vote is missing 7 Democratic votes. The text has changed the definition of decentralization but has not altered the political pricing of Trump asset conflicts.
Structural judgments belong to regulatory changes. The mechanism of change is: whoever first obtains a registered category in legislation can keep products in the U.S. and connect to bank accounts; those relying solely on administrative interpretations will become enforcement targets again in the next transition. Banks use the narrative of deposit outflows to exchange for stricter reward bans, while the crypto industry uses the narrative of offshore losses to seek long-term rules. The 60 votes on September 15 will determine whether the next round of dollars remains in low-interest accounts or continues flowing into on-chain dollars that can pay rewards under the already effective GENIUS.
ABAB News · Law of Cognition
Blocking new laws often leaves behind older laws that are even more disliked
Administrative enforcement cannot bring cross-term certainty
The outcome of the deposit narrative depends on who first writes it into legislation