The American Bankers Association, the Independent Community Bankers of America, and 76 state banking associations have sent a joint letter to Senate leaders demanding tighter restrictions on stablecoin yields in the CLARITY Act. The groups warn that current language in Section 404 may still allow activity-based or transaction-based rewards that encourage customers to hold stablecoins for extended periods, effectively turning them into deposit substitutes.
The letter, addressed to Senate Majority Leader John Thune and Minority Leader Charles Schumer, calls for replacing the “functional and economic equivalent” standard with a “substantially similar” one to make the prohibition on interest-like incentives clearer and easier to enforce. The associations argue that rewards tied to stablecoin balances, holding periods, or wallet tenure could divert deposits from community banks, undermining mortgage lending, small-business financing, and agricultural credit in local markets.
The push comes as the CLARITY Act awaits a Senate floor vote, requiring 60 votes to overcome a filibuster. The bill, which would create a broader crypto market structure and divide oversight between the SEC and CFTC, passed the Senate Banking Committee in May by a 15-9 vote. President Trump has also urged the Senate to pass the act in honor of the late Senator Lindsey Graham, linking it to competition with China and artificial intelligence. Banking groups say they are willing to negotiate further, but their demands add pressure to already heated negotiations over stablecoin rewards, ethics provisions, and final support.
