Major U.S. banking groups said they remain dissatisfied with the CLARITY Act’s newly proposed stablecoin yield language, arguing that it does not protect bank deposits.
In a statement Monday, bankers found that U.S. Senators Thom Tillis and Angela Alsobrooks are “seeking to achieve the right policy goal” by banning stablecoin profitability, but noted that the “proposed language” in the CLARITY Act currently “fails to achieve that goal.”
“It is imperative that Congress gets this right,” the American Bankers Association said in a joint statement with the Bank Policy Institute, Consumer Bankers Association, Financial Services Forum and Independent Community Bankers of America.
A dispute between bankers and the cryptocurrency industry over the profitability of stablecoins has stalled bipartisan legislation that passed the House of Representatives in July by a 294-134 vote. There are concerns that the CLARITY Act may not be passed before the U.S. midterm elections in November 2026, which could further impede its progress.
Banking groups have previously cited research suggesting that widespread adoption of stablecoins could lead to trillions in outflows from the U.S. banking system, particularly from local banks, which may not have enough balance sheet flexibility to absorb these outflows without resorting to more high-priced wholesale borrowing.
In Monday’s statement, the bankers also cited an article by Stanford University-trained economist Andrew Nigrinis, who argued that stablecoin yields causing an outflow of bank deposits “could reduce all consumer, small business and farm lending by a fifth or more, making the ban clear and transparent.”
However, White House economists reported in April that a ban on stablecoin yields could only augment bank lending by $2.1 billion, a net marginal augment of about 0.02%.
Bankers want the “gap” to be plugged.
Bankers have questioned the wording of Section 404, arguing that it allows crypto platforms to pay users bank-level interest or profits outside of customary rules.
Excerpt from “SEC 404. Prohibition of Interest and Yield on Stable Coins”. Source: Alex Thorn
“This is a significant gap that needs to be addressed,” the bankers said, adding that they would share “detailed suggestions with lawmakers on how to strengthen the proposed language” in the coming days.
Related: Lummis says the CLARITY Act provides the “strongest” protection for developers
Still, Tillis he said the current text of the CLARITY Act compromises by prohibiting stablecoin rewards on dormant balances while allowing crypto platforms to “offer other forms of rewards to customers.”
“Most importantly, it helps put us on a bipartisan path to passing the CLARITY Act by providing the regulatory certainty needed to support innovation. Some in the banking industry may not want any of these things to happen, and we respectfully agree to disagree.”
The current text of the CLARITY Act was made public on Friday, with Coinbase and other members of the crypto industry pushing for a Senate margin next week.
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