My “No” Vote on the CLARITY Act is to Protect Missouri Farmers – Josh Hawley

• Josh Hawley was one of four Republican Senators who voted against the CLARITY Act.
• Hawley claims his “no” vote on the bill was aimed at protecting farmers in Missouri.
• The CEA report nullifies Hawley’s claims about a stablecoin yield threat to small banks.

Republican US Senator Josh Hawley was among those who voted against the CLARITY Act, which failed to pass into law on September 15. The Senator representing Missouri said he voted against the bill because of its potential consequences for farmers in his state. Hawley was among four Republican Senators who voted against the bill

Senator Hawley’s Reason for Voting Against CLARITY Act

Speaking to reporters, the Senator said farmers are concerned about getting loans from small-town banks. Hawley noted that the farmers believe passing the bill will trigger investors to leave those banks and chase yields available under the CLARITY Act. Therefore, he voted against it to protect those banks, ensure they continue operating, stay competitive, and have enough capital to make loans and avoid the collapse of Missouri’s economy.

Former Ripple CTO David Schwartz interpreted Hawley’s comments as protecting bank profits rather than actually protecting the farmers he mentioned. Schwartz argued that the CLARITY Act would not have meaningfully reduced banks’ ability to make loans. However, he noted that if it did, it would mean a thriving ecosystem of people seeking decent yield with reasonable risk that could provide those loans.

CEA Report Nullifies Hawley’s Claims

Beyond Hawley’s claims and Schwartz’s argument to debunk it, the White House Council of Economic Advisers (CEA) already estimated that stablecoin yield will have no meaningful impact on bank lending. After research, the CEA reported that enacting a yield ban would trigger a paltry 0.026% lending increase in community banks—institutions with under $10 billion in assets.

The CEA report explained that the primary reason stablecoin yields do not drain lending capacity is that roughly 88% of stablecoin reserves are invested in US Treasury bills. These are funds that almost entirely recirculate back into the traditional banking system as ordinary deposits rather than being permanently removed from the credit multiplier.

However, the CEA model noted that multiple implausible conditions would have to occur simultaneously for stablecoins to trigger a meaningful 4.4% contraction and threaten small-bank lending. The Council noted that for that to happen, the stablecoin market has to balloon to six times its current size, reaching approximately $1.7 trillion. At the same time, issuers have to hold 100% of their reserves in cash rather than Treasuries, and the Federal Reserve would have to completely abandon its current ample-reserves framework.