Banking trade groups urge Senate to impose stricter limits on stablecoin yield features in the proposed Clarity Act to prevent deposit migration.
DeFi & Yields ·
Eight banking trade groups, including the American Bankers Association and Bank Policy Institute, urged Senate leaders to strengthen restrictions on stablecoin rewards ahead of a procedural vote on the Clarity Act. The groups contend that current bill language creates loopholes permitting interest-like payments tied to customer balances, duration, or tenure—incentives they say could redirect deposits away from banks and reduce lending capacity for mortgages, farms, and small businesses.
The trade groups specifically requested deletion of the word "solely" from the bill's restriction on balance-dependent rewards and replacement of an equivalence standard with a "substantially similar" test to capture incentives that functionally resemble deposit interest. They also rejected a proposed deposit-flight safeguard as insufficient, arguing that a circuit breaker activated only after substantial outflows occur fails to prevent harm upfront. The groups framed the dispute as one between deposit protection and regulatory responsiveness, emphasizing risks to community lenders.
The letter renewed demands made in May and signals deepening division over stablecoin rules. Crypto firms counter that rewards should remain available and the industry requires clear federal regulation. No estimates of potential deposit outflows have been provided by the banking groups, and the outcome of the Senate procedural vote remains uncertain.