The American Bankers Association is mounting a late lobbying effort to change stablecoin provisions in the proposed CLARITY Act, arguing the bill could allow crypto firms to offer yield-like rewards that compete directly with bank deposits.
According to an X post by senior reporter Brendan Pedersen, in a letter sent Sunday to bank chief executives, ABA President and CEO Rob Nichols called for “immediate engagement” ahead of the Senate Banking Committee’s scheduled markup of the legislation on Thursday.
Nichols said the association supports federal rules for digital assets but believes the current draft does not go far enough to restrict interest-like incentives on payment stablecoins.
ABA warns stablecoin rewards could drain deposits
Nichols said the ABA supports legislation that establishes regulatory guardrails for digital assets, but argued the current CLARITY Act language leaves what he described as a loophole.
“Without additional changes, we believe the current proposal would unnecessarily incentivize the flight of bank deposits into payment stablecoins, putting both economic growth and financial stability at risk,” Nichols wrote.
He urged bank executives to contact senators directly and encourage employees to do the same through the ABA’s grassroots advocacy platform. The ABA and other banking trade groups had already sent a joint letter to members of the Senate Banking Committee outlining proposed revisions to the bill’s stablecoin provisions.
Senate Banking Committee set for Thursday markup
The Senate Banking Committee is expected to review and vote on the CLARITY Act later this week.
The legislation would establish a federal framework for digital commodity exchanges, brokers, dealers, and other intermediaries. It also seeks to clarify the jurisdictional boundaries between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).
Stablecoin regulation has become one of the more contested issues as lawmakers debate whether issuers should be permitted to share yield or rewards generated from reserve assets with token holders. Banks argue that such products would function similarly to interest-bearing accounts without being subject to the same capital, liquidity, and deposit insurance requirements.
Digital Chamber pushes back on banking lobby
The ABA’s campaign drew immediate criticism from crypto advocates. Cody Carbone, Chief Policy Officer at The Digital Chamber, accused banking groups of waiting until the final days before the markup to raise objections. “The arrogance is astounding,” Carbone wrote in a post on X.
He said banks had declined to negotiate over stablecoin rewards for months and did not make the issue a major sticking point during earlier legislative debates, including consideration of the GENIUS Act and the House’s advancement of the CLARITY Act.
Carbone described the effort as “an eleventh-hour attempt to protect incumbents from competition,” adding that consumers should have access to new financial products that offer better returns and more options.
Stablecoin yield debate becomes key flashpoint
The dispute highlights a broader policy question: whether stablecoins should be treated solely as payment instruments or allowed to compete more directly with bank deposit products. Supporters of stablecoin rewards argue that issuers should be free to pass on a portion of income generated from short-term U.S. Treasury holdings backing the tokens.
Banks counter that allowing such rewards could shift significant deposits away from the regulated banking system while creating products that resemble uninsured money market accounts.
The Senate Banking Committee’s markup will indicate whether lawmakers are willing to revise the bill’s stablecoin provisions before the legislation moves forward.
Also Read: The Kingmakers: Meet the Players Holding the Keys to the CLARITY Act
