Pat Toomey urges regulators to avoid bank-style rules for stablecoins as CLARITY Act heads to Senate floor

Former US Senator Pat Toomey wants the Senate to stop treating stablecoins like they’re banks in disguise. In remarks delivered on August 4, the Pennsylvania Republican pushed lawmakers to pass the Digital Asset Market Clarity Act, commonly known as the CLARITY Act (H.R. 3633), before Congress breaks for its August recess. The $300 billion question Toomey pointed to stablecoins reaching an approximate market size of $300 billion as evidence that this asset class has outgrown the “experimental” label. More importantly, he noted that this growth hasn’t come at the expense of traditional bank deposits. That distinction matters. Banks have been vocal about their concern that stablecoins could siphon away deposits, undermining a pillar of traditional finance. Toomey’s counterpoint draws from history: he compared current banking anxiety over stablecoins to the panic that accompanied the rise of money market funds in the 1970s. Back then, banks worried that money market funds would drain their deposit base. What actually happened was that the financial system expanded to accommodate both products. Money market funds eventually got their own regulatory framework under the SEC rather than b...