Source: Cointelegraph
Original: “NYU Professor: Bank Lobbyists Are 'Panicking' Over Yield-Bearing Stablecoins”
The powerful banking lobby in the United States is "panicking" over the potential of stablecoins to disrupt traditional business models, particularly regarding yield-bearing stablecoins, said Austin Campbell, a professor at New York University and founder of Zero Knowledge Consulting.
In a social media post on May 21 that began with "The Lobby's Counterattack," Campbell pointed out that the banking industry is especially alert to the potential of stablecoins to offer interest or rewards to holders.
In a sharp message directed at Democratic lawmakers, Campbell wrote, "Banks want you to protect their monopoly so they can continue to exploit your constituents."
He further explained how the fractional reserve banking system allows banks to maximize profits while providing minimal interest returns to depositors.
Campbell added that banking lobbyists claim that if stablecoins pay interest or any other type of monetary rewards, banks will be "harmed."
"This is blatant cartel protection," he stated, urging opposition parties to avoid "screwing over" their constituents by supporting a blanket ban on any type of interest payments for stablecoins.
Campbell has long advocated for reasonable stablecoin regulations in the U.S., warning a congressional subcommittee in April 2023 that without such laws, issuing entities would move overseas.
Campbell's sharp assessment of traditional banking comes amid a wave of stablecoin issuers launching yield-bearing tokens.
According to Cointelegraph, the U.S. Securities and Exchange Commission (SEC) approved the first yield-bearing stablecoin security issued by Figure Markets in February. The newly launched YLDS token offered a yield of 3.85% at issuance.
Figure Markets is not the only market participant pursuing yield-bearing stablecoins.
In February, Tether co-founder Reeve Collins announced that his Pi Protocol would allow investors to mint USP stablecoins through USI, an interest-paying equivalent.
Spark Protocol's USDS also provides holders with interest earnings generated through decentralized lending and tokenized government bonds.
"Holding stablecoins without at least a risk-free rate of return is unacceptable," said Sam MacPherson, CEO of Phoenix Labs, the developer of Spark Protocol, in an interview with Bloomberg.
Aside from Bitcoin (BTC), stablecoins have arguably become the most influential application of blockchain technology. Lucas Matheson, CEO of Coinbase Canada, revealed in an interview with Cointelegraph that global stablecoin trading volume is nearly three times that of credit card giant Visa.
Related: Report: Yield-Bearing Stablecoin Market Surges to $11 Billion, Accounting for 4.5% of Total Stablecoin Market
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