Banks Urge Tightening of Clarity Act Stablecoin Language

Five major U.S. banking trade groups released a joint statement calling for stronger language in the Clarity Act, arguing the bill leaves room for stablecoin payouts that could resemble bank deposit interest. The groups pointed to Section 404 as creating what they described as a loophole that must be closed.

The American Bankers Association, the Bank Policy Institute, the Consumer Bankers Association, the Financial Services Forum and the Independent Community Bankers of America backed the senators’ goal of preventing deposit flight but requested clearer prohibitions. Senators Thom Tillis and Angela Alsobrooks unveiled the bipartisan compromise after months of negotiations with banks, the White House and crypto firms. The provision bars deposit-style yield while allowing some rewards tied to on-platform activity.

The banking groups objected to reward structures that take into account duration of holdings, balance levels and account tenure. They argued those formulas would reward idle stablecoin balances and undermine the ban on interest-like payments. In a joint statement, the groups wrote that the proposed language ‘‘falls short’’ of prohibiting the payment of yield and interest on stablecoins and that Congress should strengthen the text.

Senator Tillis responded on X, noting banks participated in the negotiations and that the compromise targets the core concern over deposit flight. He wrote that the measure ‘‘prohibits stablecoin rewards from resembling interest on bank deposits’’ and warned against letting ‘‘the perfect become the enemy of the good.’’

The trade groups said they will submit detailed amendment suggestions to lawmakers in the coming days, aiming to protect community lending while preserving on-platform innovation. They added they will continue to engage with Congress in drafting clearer language.

Legislative staff and industry participants expect the Senate Banking Committee to mark up the bill later this month. The debate centers on how narrowly to define prohibited yield so that rewards tied to active platform use remain permitted while payments that effectively function as bank interest are banned.