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US Banks Press for Tighter Stablecoin Reward Curbs Ahead of Senate CLARITY Act Markup
Summary
- The American Bankers Association said it had begun lobbying senators on the CLARITY Act while calling for tighter regulation of stablecoin interest-like rewards.
- Alsobrooks and Tillis released an amendment to ban interest and yield payments for simply holding stablecoins, winning support from parts of the crypto industry.
- Banking groups said exceptions could accelerate a shift of bank deposits into stablecoins and called for clearer rules on reward structures.
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US banks are pressing for tighter limits on stablecoin rewards ahead of the Senate Banking Committee’s markup of the CLARITY Act, with restrictions on stablecoin interest payments reemerging as a key point of contention.
The Block reported on May 11 that Rob Nichols, chief executive officer of the American Bankers Association, recently sent a letter to major bank executives urging them to lobby senators.
Nichols wrote that the current bill does not sufficiently restrict stablecoin-based “interest-like rewards.” Without further revisions, he said, the measure could create unnecessary incentives for bank deposits to migrate into payment stablecoins, posing risks to economic growth and financial stability.
The latest push comes before the Senate Banking Committee’s scheduled May 15 markup of the CLARITY Act, which would establish a federal regulatory framework for the broader US digital-asset industry.
A markup initially scheduled for January was postponed at the last minute after Coinbase withdrew its support, citing provisions including the stablecoin rewards rules.
Senate negotiators have since produced a compromise on the issue. On May 2, Democratic Senator Angela Alsobrooks and Republican Senator Thom Tillis released an amendment that would bar structures allowing US users to earn interest or yield simply for holding stablecoins.
The restrictions would apply not only to cash or token payouts, but also to compensation that is economically equivalent to interest on bank deposits. Rewards and incentives tied to actual activity, such as payments and remittances, would still be permitted.
The compromise has won backing from parts of the crypto industry, including Coinbase, but banks argue the language remains unclear.
Banking industry groups recently sent another letter to the Senate Banking Committee saying it remains uncertain whether structures under which fixed monthly rewards rise alongside stablecoin balances would be allowed.
They argued that some exceptions could effectively serve as a way around the prohibition and could accelerate a shift of bank deposits into stablecoins.
Minseung Kang
minriver@bloomingbit.ioBlockchain journalist | Writer of Trade Now & Altcoin Now, must-read content for investors.
