US Banks Urge Changes to CLARITY Act Stablecoin Interest Provisions

US banking groups are pressing for changes to stablecoin interest and yield provisions in the CLARITY Act, a crypto market-structure bill now under Senate review.

Cointelegraph reported on July 14 that the American Bankers Association, the Independent Community Bankers of America and 76 state banking associations urged Senate leaders in a joint letter to revise provisions related to stablecoin interest, yield and compensation.

The ABA wrote in the letter that ambiguous language in the current bill could effectively allow stablecoins to function as a substitute for bank deposits. It argued that, as Congress has consistently stated, payment stablecoins should function as a transaction tool rather than a store of value. The banking groups said the current draft could trigger deposit outflows and called for Section 404 to be amended to clarify the ban on interest and yield while blocking workaround structures.

The letter was sent ahead of a House hearing scheduled for July 17. The CLARITY Act seeks to establish the first comprehensive US regulatory framework for digital assets.

JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said in an interview in May that the banking industry would continue to fight the current CLARITY Act. He added that crypto companies should be required to obtain a bank charter if they want to pay yield on stablecoins.

Separately, Galaxy Digital said on June 26 that it had cut the odds of the CLARITY Act being enacted this year to 50%. It cited the lack of a completed combined bill between the Senate Banking and Agriculture committees, the absence of a confirmed floor schedule and a shrinking window for passage before Congress recesses.