Key Highlights
- American Bankers Association backs the CLARITY Act but wants a few changes to protect community banks.
- ABA warns stablecoin rewards could reduce bank deposits, affecting lending to small businesses and local communities.
- The Senate is expected to hold an initial vote before August 7 while lawmakers continue negotiating changes to the bill.
The American Bankers Association (ABA) has expressed support for the Digital Asset Market Clarity (CLARITY) Act while urging U.S. lawmakers to make targeted changes before advancing the legislation. Rather than opposing the bill, the ABA said it supports establishing a clear regulatory framework for the crypto industry but wants to ensure the legislation does not create unintended consequences for community banks.
Speaking on CNBC’s ‘Squawk Box’ on Wednesday, Rob Nichols, President and CEO of the group, said the association supports having a clear system for overseeing digital assets and believes innovation should continue to grow in the United States.
“We do think that we should have a supervisory framework over digital assets,” Nichols said. “We think that’s important. We think that innovation in the United States is important as well. So we support that.”
However, he said lawmakers should ensure the new rules do not reduce the money banks use to support families, small businesses, and local communities.
Why the banking group wants changes
The ABA’s biggest concern is not the CLARITY Act itself but one part of the bill that could affect community banks. Nichols said some stablecoins may offer interest, rewards, or other benefits that could encourage people to move money out of their regular bank accounts. If that happens on a large scale, smaller banks could lose deposits. These deposits are important because banks use them to provide loans to local businesses, homeowners, and other customers.
According to Nichols, Congress already showed its intention in the GENIUS Act by stopping payment stablecoin issuers from offering yield or interest. He said the ABA simply wants the same rule to clearly cover affiliates and crypto exchanges as well. That, he said, would close any possible gaps in the legislation and make sure the law works the way lawmakers intended.
Nichols stressed that the banking group is not asking Congress to rewrite the bill. Instead, he described the proposed revisions as “tiny surgical edits.” He said the changes affect only two paragraphs in a bill that is more than 600 pages long. The ABA is already discussing those changes with senators as work on the legislation continues.
Banks and crypto can coexist, ABA says
The banking executive also pushed back against the idea that banks and crypto companies are competing against each other. He said both industries can grow at the same time if the right rules are in place.
“I think that the crypto and the banking sectors can coexist,” Nichols said. “I think we can be the crypto capital of the world. And I think we can be the banking capital of the world.”
Nichols also explained why the ABA believes payment stablecoins should not be treated the same as bank deposits. He said Congress created the idea of payment stablecoins to improve payments, not to replace money held in checking or savings accounts.
In his view, the two serve different purposes, and the final law should continue to reflect that difference.
Where the CLARITY Act stands now
The latest version of the CLARITY Act was released on July 22. The draft combines the Senate Banking Committee’s work with the Agriculture Committee’s Digital Commodity Intermediaries Act into a single 616-page bill.
Senator Cynthia Lummis said the release marked progress toward a final agreement, but said lawmakers still need to reach a final agreement before the legislation can become law.
Senate vote expected before August recess
The Senate is expected to hold an initial procedural vote on the CLARITY Act before August 7. However, there are still several hurdles that remain before the legislation can receive final approval.
Lawmakers still need to complete debate, consider possible amendments, and resolve disagreements over ethics provisions. Even with those challenges, discussions around the bill continue as senators work to finalize one of the biggest crypto market regulation proposals introduced in the United States.
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