U.S. Banking Groups Urge Senate to Tighten Stablecoin Yield Rules in CLARITY Act

Highlights:

• U.S. banking groups want the CLARITY Act tightened to restrict stablecoin interest, yield and reward programs.
• They warn stablecoin rewards could pull deposits from community banks and reduce lending to local businesses.
• The groups asked senators to close Section 404 loopholes as pressure grows for the bill’s passage.

Community banks across the United States are asking lawmakers to refine a major cryptocurrency bill before it becomes law. On July 13, the American Bankers Association (ABA), alongside the Independent Community Bankers of America and 76 state banking groups, sent a joint letter to Senate leaders. They warned that crypto companies could use reward programs to attract money that would otherwise remain in traditional bank deposits.

The joint letter was sent to Senate Majority Leader John Thune and Senate Minority Leader Chuck Schumer on behalf of banking associations across the United States. The groups said they support responsible cryptocurrency innovation and clearer digital asset regulations. However, they argued that Section 404 of the CLARITY Act may still allow crypto platforms to offer returns that work much like interest on bank deposits.

🚨BANKS RAMP UP PRESSURE ON CLARITY ACT: ABA, ICBA AND 76 STATE GROUPS PUSH TO TIGHTEN STABLECOIN RULES!

The ABA, ICBA, and 76 state banking associations sent a joint letter urging Senate leaders to strengthen the bill’s stablecoin provisions.

Their main concern: the current… pic.twitter.com/n8JRp3Us6Y

— Crypto Banter (@crypto_banter) July 14, 2026

Banks Raise Concerns Over Stablecoin Interest and Rewards

The banking associations said Congress has generally treated payment stablecoins as tools for transactions rather than savings products. They believe some language in the CLARITY Act could allow platforms to offer rewards based on how many stablecoins a customer holds or how long they keep them. Such rewards could encourage users to treat stablecoins like savings accounts. However, stablecoins do not always carry the same protections as insured bank deposits.

The groups warned that attractive stablecoin rewards could move funds away from banks. Community banks rely heavily on deposits to provide mortgages, small-business financing, agricultural loans and other forms of local credit. A large shift toward stablecoin products could therefore reduce the amount of money available for lending, according to the letter.

Banking Groups Seek Tighter Stablecoin Rules Under CLARITY Act Section 404

The banking associations proposed several changes to Section 404 of the CLARITY Act. They asked senators to remove language that could limit the scope of the proposed ban on stablecoin interest and yield. They also recommended replacing the bill’s “functional and economic equivalence” standard with a broader “substantially similar” test.

Under the current wording, regulators may need to prove that a stablecoin reward is economically equivalent to interest paid by a bank. The proposed change would allow regulators to examine whether a reward is substantially similar to deposit interest, even when it uses a different structure or name.

The groups also want the Senate to remove a provision allowing certain benefits to be calculated using a customer’s stablecoin balance, holding period or length of participation on a platform. Banks commonly calculate interest using account balances and the time money remains deposited. The associations argued that crypto firms could use similar factors to offer interest-like returns while describing them as rewards or benefits.

Senate Faces Pressure to Clarify Stablecoin Regulation

The letter asked lawmakers to establish clear limits on rewards connected to holding or maintaining payment stablecoins. The banking groups said stronger language would make it harder for companies to avoid stablecoin interest restrictions through carefully designed incentive programs.

They also argued that clearer stablecoin rules would support digital asset innovation without weakening community banks or reducing access to credit. The CLARITY Act aims to create a clearer federal regulatory framework for the U.S. cryptocurrency market. As the Senate considers the legislation, rules covering stablecoin yield, interest, and rewards are likely to remain an important part of the debate.

The letter comes as pressure grows on the Senate to advance the CLARITY Act. President Donald Trump has urged lawmakers to pass the bill. Meanwhile, Senator Elizabeth Warren is calling for stronger ethics rules.

🚨NEW: President Trump says the Senate should pass the Clarity Act in honor of Senator Lindsey Graham, saying the late South Carolina Republican was a “big supporter” of the legislation. https://t.co/M6ERKHuGNR

— Eleanor Terrett (@EleanorTerrett) July 13, 2026