Stablecoin Yield Ban Puts US Dollar on Edge - Digital Yuan Gains Critical Advantage, Warns Scaramucci

The greenback's global dominance faces a new digital challenger—and regulatory moves might be handing it the keys.

The Yield Crackdown That Changes Everything

Forget interest rates for a second. The real battle for financial supremacy is playing out in the code. A looming ban on stablecoin yields—those returns that made dollar-pegged tokens so attractive—isn't just a compliance headache. It's a strategic gift to China's digital yuan, argues SkyBridge Capital's Anthony Scaramucci. By stripping dollar-based stablecoins of a core utility, regulators are inadvertently weakening the very ecosystem that props up demand for the USD in the digital age.

Digital Yuan's Open Goal

While Western regulators scramble to contain crypto's wilder promises, China's centrally-controlled digital currency faces no such constraints. It can be programmed, tracked, and integrated into state-backed financial products from day one—no yield debates, no decentralized finance (DeFi) dilemmas. This isn't about technology being better; it's about deployment being frictionless. The digital yuan bypasses the ideological wars holding back its competitors, offering a seamless, state-sanctioned alternative just as the other team gets a red card. Talk about perfect timing—the kind usually reserved for well-connected hedge funds.

The New Reserve Currency Calculus

Reserve status isn't lost in a day. It erodes through a thousand cuts in convenience and utility. If the digital dollar's most agile proxies are hamstrung, global users and institutions will seek efficiency elsewhere. The digital yuan, unburdened by legacy finance's regulatory baggage, is poised to capture that flow in trade settlement and regional finance. The playbook is clear: provide the infrastructure, and the influence follows.

The dollar isn't collapsing. But its digital moat is springing a leak—and the competition is already building canals. In the race for the future of money, the first rule is to not disarm your own champions. Sometimes, protecting the system means understanding what you're actually protecting it from.

Stablecoin Yield Ban And Dollar Competitiveness

Lawmakers in Congress are considering a bill that WOULD reshape how digital assets are treated in the United States.

“The whole system is broken,” Scaramucci said on X, reacting to the Clarity Act’s restriction that blocks crypto exchanges and service providers in the US from paying yield to stablecoin holders.

According to the bill text, the proposed Clarity Act would bar certain kinds of yield or interest from being paid in connection with holding payment stablecoins, closing off a path some platforms use to offer rewards. This change is woven into a broader effort to define which digital tokens fall under which regulators.

The whole system is broken: The Banks do not want the competition from the stable coin issuers so they’re blocking the yield in the meantime the Chinese are issuing yield so what do you think the emerging countries will choose as a rail system the one with or without yield?

— Anthony Scaramucci (@Scaramucci) January 16, 2026

Banks And Exchanges Push Back

Reports note the MOVE has split industry players. Some banks have warned that easy access to yield outside the banking system could drain deposits and change lending patterns.

At the same time, major crypto firms have voiced concern that a hard ban on yield will blunt the competitiveness of US dollar-based token services and could push global users toward alternatives that offer returns.

The debate has also strained support for the bill, with at least one high-profile exchange pulling its backing amid disagreement.

China is already acting on a different path. Based on reports, commercial banks there will be allowed to pay interest on digital yuan holdings, a step meant to boost use of the state’s central bank digital currency.

The change went into effect around the start of this year and was presented as a way to encourage people and institutions to try the e-CNY more often.

Money flows respond to yield. If a digital yuan offers returns while US dollar tokens cannot, some governments and firms in emerging markets might favor the payment rails that provide a financial edge.

That is the central point behind Scaramucci’s warning. It’s not just about finance and stablecoins; it is also about which systems gain traction for trade and cross-border payments.

Regulators now face a tough call. Reports say the choice is between strict limits that curb certain crypto yields and looser rules that could pressure bank deposits. Either route carries tradeoffs for stability, competition, and the global reach of the dollar.

Featured image from Unsplash, chart from TradingView