Five US banking lobbies issued a joint statement saying the proposed language on stablecoin yield in the Clarity Act falls short of its goal of protecting bank deposits.
The five trade groups backed the senators’ goal but demanded stronger text. It included the American Bankers Association, the Bank Policy Institute, the Consumer Bankers Association, the Financial Services Forum, and the Independent Community Bankers of America.
US Banks Want Tighter Stablecoin Yield Language in Clarity Act
Senators Thom Tillis and Angela Alsobrooks released the bipartisan compromise on stablecoin rewards. This came after months of talks with banks, the White House, and crypto firms.
The provision bars deposit-style yield but leaves room for rewards tied to genuine on-platform activity. The banking groups acknowledged the senators’ efforts to address deposit flight risks. They said their forthcoming feedback would aim to preserve community lending while accommodating innovation.
“Senators Tillis and Alsobrooks are seeking to achieve the correct policy goal – prohibiting the payment of yield and interest on stablecoins; however, the proposed language falls short of that goal. It is imperative that Congress get this right,” the statement read.
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The banking groups in particular pointed to Section 404. The text lets crypto exchanges pay yield through user membership programs, provided the payouts are not structured like bank interest. The lobbies called this a major loophole that lawmakers must close.
They also objected to rewards calculated on the basis of duration, balance, and tenure. Banks argue this setup directly rewards idle stablecoin holdings, defeating the prohibition’s purpose of preventing deposit flight.
“We will be sharing our detailed suggestions for strengthening the proposed language with lawmakers in the coming days, and we will continue to work in good faith to help Congress embrace innovation while protecting the deposits that drive local lending and economic activity in their communities,” they added.
Tillis Defends the Compromise
Tillis pushed back on Monday. He said on X that banks had a seat at the table for months of negotiations.
“Our compromise prohibits stablecoin rewards from resembling interest on bank deposits, our core concern over deposit flight… Some in the banking industry may not want either of these things to happen, and we respectfully agree to disagree,” he said.
Tillis warned against letting “the perfect become the enemy of the good.” The lobbies will submit detailed suggestions within days, ahead of an expected Senate Banking Committee markup later this month.
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The post Banks Say Stablecoin Yield Language Falls Short, Senator Tillis Disagrees appeared first on BeInCrypto.
