Key facts
- Eight US banking trade groups urged Senate leaders to tighten restrictions on stablecoin rewards in the Clarity Act.
- The groups argue that exceptions in the bill could allow interest-like payments on stablecoin balances.
- The banking groups want to remove language allowing rewards to depend on a customer's balance, duration, or tenure.
- The groups stated a proposed deposit-flight safeguard would activate only after substantial deposit flight has occurred.
- White House Crypto Council Director Patrick Witt supports new stablecoin rules in the CLARITY Act.
Eight U.S. banking trade groups have urged Senate leaders to impose stricter limits on stablecoin rewards within the proposed Clarity Act, arguing that current exceptions could permit interest-like payments that draw deposits away from traditional banks. The groups expressed concern that such incentives could reduce lending capacity, particularly for community banks.
In a letter to Senate leaders John Thune and Chuck Schumer, the associations stated that while they support the principle of distinguishing stablecoin rewards from deposit interest, the current legislative text contains loopholes. They specifically requested the removal of language that would allow rewards to be tied to a customer's balance, duration, or tenure, arguing this contradicts the bill's initial prohibition on interest-like payments. The groups also criticized a proposed "circuit breaker" safeguard, which they believe would only activate after substantial deposit outflows have already occurred, rendering it ineffective.
These demands echo concerns previously raised by six banking trade groups in May. The debate over the Clarity Act's stablecoin provisions has intensified as the Senate approaches a key procedural vote. White House Crypto Council Director Patrick Witt has previously voiced support for the bill's stablecoin rules, aiming to limit rewards and boost Treasury authority, though banking groups argue these measures do not go far enough. Grayscale Research estimates a 29% probability of the Clarity Act passing this year.