Key facts
- The American Bankers Association (ABA), Independent Community Bankers of America (ICBA), and 76 state banking associations sent a joint letter to Senate leaders.
- The letter calls for amendments to the stablecoin yield provisions in the Digital Asset Market Clarity Act (CLARITY Act).
- Banking groups argue that current language could allow stablecoins to function as substitutes for deposits.
- They seek clarification to prevent circumvention of prohibitions on interest and yield.
- The CLARITY Act is set for a House of Representatives hearing on July 17.
A broad coalition of US banking industry groups, including the American Bankers Association (ABA) and the Independent Community Bankers of America (ICBA), has formally requested amendments to the stablecoin yield provisions within the Digital Asset Market Clarity Act (CLARITY Act). In a joint letter to Senate leaders, these organizations expressed concerns that the current wording is too ambiguous and could inadvertently allow payment stablecoins to operate as substitutes for traditional bank deposits, rather than solely as transaction tools.
The banking groups support the overall CLARITY Act but are specifically targeting section 404, urging lawmakers to clarify prohibitions on interest and yield to prevent circumvention through alternative incentive structures. They warn of a potential 'deposit flight' if stablecoins are allowed to function as stores of value with interest.
This pushback comes shortly before a scheduled House of Representatives hearing on the bill on July 17. The CLARITY Act, which aims to establish the first comprehensive regulatory framework for digital assets in the US, previously passed the Senate Banking Committee in May. However, it has faced opposition from Democrats and the banking industry who argue it would permit crypto firms to offer yields on stablecoins without adhering to the same regulatory requirements as banks. JPMorgan CEO Jamie Dimon has publicly stated the banking industry's intention to 'fight' the current version of the bill.
Despite industry opposition, the CLARITY Act has garnered support from law enforcement, with the Federal Law Enforcement Officers Association (FLEOA) endorsing the bill and calling for enhanced accountability in decentralized finance. Meanwhile, Galaxy Digital has recently lowered its forecast for the bill's passage by the end of the year, citing legislative hurdles and a narrowing window before congressional recess.