US stablecoin interest ban could drive capital offshore, experts warn

A potential ban on interest payments for stablecoins under the proposed U.S. Crypto-Asset Market Structure (CLARITY) Act could risk driving capital out of regulated markets, according to Colin Butler, head of markets at Mega Matrix. He warned that funds might flow into opaque offshore financial markets. Andrei Grachev, a founding partner at Falcon Finance, echoed this concern, suggesting that capital could shift to synthetic dollar products. He cited Ethena's USDe as a prime example, noting that such products exist in a regulatory gray area because they do not fall under the definition of payment stablecoins in the proposed legislation. Grachev argued that a ban on stablecoin interest could ultimately undermine U.S. competitiveness.