Eight banking trade groups called on Senate leadership Monday to tighten stablecoin rewards restrictions in the proposed Clarity Act, warning that exceptions in the current bill could permit interest-like payments that draw deposits away from traditional banks.
In a letter to Senate leaders John Thune and Chuck Schumer, the groups said they could not support the latest revisions regarding stablecoin rewards and sought stricter limits on payments tied to customer holdings or duration. Signatories included the American Bankers Association, Bank Policy Institute, and Independent Community Bankers of America, representing both large banks and community lenders.
The groups identified specific concerns with the legislative text. They requested removal of the word "solely" from a restriction on balance-related payments and replacement of an equivalence standard with a "substantially similar" test to capture incentives resembling deposit interest.
The banking groups also sought deletion of language allowing otherwise permissible rewards to depend on customer balance, duration, or tenure. "Given that interest payments are often calculated by reference to duration, balance and tenure, this subsection appears to contradict the initial prohibition," they wrote.
Banks argued that such incentives could redirect funds from lending for mortgages, farms, and small businesses. The letter noted that community and mission-driven lenders could face particular exposure, though it provided no quantified estimates of potential deposit outflows.
The groups also objected to a proposed deposit-flight safeguard mechanism, stating it would activate only after substantial outflows had already occurred. "A circuit breaker that activates only after substantial deposit flight has already occurred is not a safeguard at all," the letter stated.
The letter renewed demands initially made by six banking trade groups in May. The dispute has expanded to senators' home states, where community bankers have pressed for stricter restrictions while crypto advocates have advocated for the bill. Crypto firms contend that stablecoin rewards should remain available and that the industry requires clearer federal rules.
The letter preceded a key Senate procedural vote scheduled for Tuesday following release of revised Clarity Act language. The broader bill aims to establish federal rules for digital assets and clarify regulators' responsibilities.
