Eight major US banking trade organizations have formally warned Senate leaders that the final draft of the CLARITY Act does not adequately protect the banking system from stablecoin-driven deposit flight. According to Fox Business reporter Eleanor Terrett, the groups sent a letter on September 14, 2026, to Senate Majority Leader John Thune and Minority Leader Chuck Schumer as the bill awaits consideration in the Senate.
The organizations include the Bank Policy Institute, the American Bankers Association, the Consumer Bankers Association, the Financial Services Forum, and the Independent Community Bankers of America. They argue that allowing payment-oriented stablecoin issuers to offer interest or yield could trigger significant deposit outflows from banks, reducing lending capacity. Community banks and deposit-based lenders would be especially hard hit, the groups warned.
A central point of criticism is the bill's circuit breaker mechanism. The banking groups say it would be activated only after a substantial amount of deposit outflow has already occurred, meaning it cannot be considered a preventive safeguard. They also caution that stablecoin providers could sidestep a direct interest ban by using alternative reward and incentive models.
The letter calls for explicitly prohibiting all direct and indirect interest and returns tied to stablecoin holdings, removing restrictive phrases from the current text, and banning incentives that are economically similar to bank deposit interest rates. While the groups support a permanent and comprehensive regulatory framework for digital assets, they insist the CLARITY Act in its current form does not provide sufficient protection against deposit displacement.
