US Banks Urge Closure of Loopholes in Stablecoin Yield Ban

The American Bankers Association, the Independent Community Bankers of America, and 76 regional associations have called on the Senate to clarify the provisions of the CLARITY Act regarding stablecoin yields. This was stated in a joint letter.

The organizations support the creation of a regulated digital asset market but demand revisions to Section 404 of the bill. They argue that the current wording leaves room for payments that are economically similar to interest on deposits.

“Uncertainties in the bill could lead to schemes with stablecoins that effectively become substitutes for deposits,” the authors of the letter stated.

The banking groups emphasized that payment “stablecoins” should be used for transactions, not for long-term storage aimed at generating income.

Debate Over Reward Programs

The current version of the CLARITY Act prohibits crypto service providers and related companies from paying American clients passive interest or yields on the balances of payment stablecoins.

At the same time, the document allows rewards for actual actions and transactions. Specific rules are to be jointly developed by the U.S. Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and the Department of the Treasury.

The banks believe the line between the two categories is not clearly defined. They proposed to exclude payments that depend on the amount of stablecoins, the duration of their storage, or the length of time on the platform.

The associations also want to replace the criterion of “functional and economic equivalence” used in the bill with a broader standard of “substantial similarity.” They believe this would make it harder to circumvent the ban through bonus programs.

The authors of the letter argue that the outflow of deposits into stablecoins could reduce regional banks' resources for mortgage, agricultural, and small business lending.

CLARITY Act Awaits Senate Vote

The CLARITY Act aims to establish a federal regulatory framework for digital assets and delineate the powers of the SEC and CFTC. In May, the Senate Banking Committee approved the bill by a vote of 15 to 9. The full chamber is set to consider the document, but a voting date has not yet been scheduled.

In July, CFTC Chairman Michael Cella urged for the swift passage of the bill, warning that regulators would “write all the rules” for the crypto industry themselves if Congress does not move toward a resolution. Later, U.S. President Donald Trump echoed similar demands to the Senate.

It is worth noting that in May, JPMorgan CEO Jamie Dimon criticized the CLARITY Act for allowing rewards to stablecoin holders. He stated that crypto companies wishing to offer bank-like interest should obtain the appropriate licenses.