A group of 134 banking association officers and bank leaders from across the United States is urging the Senate to revise the CLARITY Act before final passage, warning that stablecoin incentives could challenge the role of bank deposits.
Key Takeaways
134 bank leaders urged Senate lawmakers to strengthen stablecoin interest and yield restrictions in the CLARITY Act.Bankers warned incentives tied to stablecoin holdings could weaken the deposit base supporting local lending.The dispute centers on whether payment stablecoins should function only as transaction tools.Section 10404 of the crypto legislation establishes restrictions on paying interest or yield on payment stablecoins. The banking executives want lawmakers to strengthen the provision so companies cannot bypass the prohibition through rewards, incentives, or other arrangements that create similar economic benefits for holding stablecoins.
The bank leaders stated:
“We therefore urge the Senate to incorporate the targeted Section 10404 changes recommended by our state bankers associations before final passage.”
“If stablecoin products are permitted to attract and retain balances through interest-like rewards or other holding-based incentives, the local funding base that supports this lending could be weakened by hundreds of billions,” the group warned.
Stablecoin Rewards Become Central Issue in Crypto LegislationThe debate highlights a broader disagreement over the future role of stablecoins in financial markets. Bankers argue payment stablecoins should remain focused on transactions rather than become products designed to attract long-term holdings.
The signatories argued that incentives tied to balances, holding periods, or account duration could replicate features of interest-bearing products, creating the need for clearer boundaries in the CLARITY Act.
Bank leaders say deposits remain a major source of funding for mortgages, business expansion, agricultural operations, and community investment. They argue that stablecoin products designed around holding incentives could alter those funding flows.
The proposed CLARITY Act revisions would preserve stablecoin payment innovation while limiting structures that bankers believe could replicate deposit-like incentives without the same regulatory framework applied to insured banks.
The Senate’s final language on stablecoins will define how payment-focused digital assets operate within the broader U.S. financial system.
