U.S. Banking Groups Urge Senate to Tighten Stablecoin Rewards Limits Ahead of Clarity Act Vote

A coalition of major U.S. banking trade groups is pressing the Senate to strengthen the Clarity Act's limits on stablecoin interest and rewards, reviving a long-running dispute with the crypto industry over whether stablecoin holders should be able to earn rewards. Eight organizations, including the American Bankers Association, the Bank Policy Institute and the Independent Community Bankers of America (ICBA), sent a letter Monday to Senate Majority Leader John Thune and Democratic Leader Chuck Schumer, calling for revisions ahead of Tuesday's Senate vote. The groups said the latest bill text still leaves room for crypto firms to offer rewards that effectively resemble interest on bank deposits, which they argue could prompt customers to shift funds from banks into stablecoins. The debate has intensified as the stablecoin market has expanded to hundreds of billions of dollars, while crypto leaders contend banks are exaggerating the competitive threat. Although federal law already bars stablecoin issuers from paying yield directly, banks say the framework still permits reward-style incentives to be delivered through exchanges and other intermediaries. They want Congress to draw clearer boundaries. The coalition also criticized a proposed deposit-flight "circuit breaker" that would let regulators step in if stablecoins begin driving significant deposit losses. "A circuit breaker that activates only after substantial deposit flight has already occurred is not a safeguard at all," the groups wrote. In a separate letter, ICBA outlined that the provision would apply for an 18-month period after the law takes effect and could be triggered if regulators find transfers into payment stablecoins have caused a "substantial detrimental impact" on deposits at community banks with less than $10 billion in assets. The groups also urged lawmakers to remove language that would allow rewards to vary based on how many stablecoins a customer holds and for how long, arguing such structures can make a rewards program operate like a savings account.