The American Bankers Association (ABA), the Independent Community Bankers of America (ICBA), and 76 regional associations have sent a joint appeal to the Senate demanding stricter wording in the CLARITY Act bill. The main focus is Section 404, concerning the ban on yield from payment stablecoins.
Bankers support the creation of a regulated digital asset market but insist that the current version of the document leaves dangerous gaps. In their view, vague definitions allow crypto companies to disguise interest payments as "loyalty programs" or "activity rewards." This essentially creates a parallel deposit system outside of banking oversight.
Where is the line between yield and bonuses?
The CLARITY Act directly prohibits stablecoin issuers and related firms from paying passive interest or yield on fund balances. However, the bill allows rewards for actual transactions and actions, with specific criteria to be jointly developed by the SEC, CFTC, and the Treasury Department.
Banking groups consider this line blurred. Their proposal is to exclude any payments whose amount depends on the volume of stablecoins, the duration of their holding, or the time spent on the platform. Additionally, the associations demand replacing the "functional and economic equivalent" criterion with a broader "substantial similarity" standard. In their view, this would make it harder to circumvent the ban through complex bonus schemes.
The letter's authors warn that a massive outflow of deposits into yield-bearing stablecoins would undermine the resource base of regional banks, critically impacting mortgage, agricultural lending, and small business financing.
CLARITY Act: Political battle heats up
The bill, designed to create a federal regulatory system for the crypto market and delineate the powers of the SEC and CFTC, has already passed a key vote in the Senate Banking Committee (15 to 9). It now awaits consideration by the full chamber, but a review date has not yet been set.
In July, CFTC Chairman Michael Selig called for expedited adoption, threatening that regulators would write the rules themselves if Congress delayed. President Donald Trump later joined this demand. However, the banking lobby, including JPMorgan CEO Jamie Dimon, who previously criticized the bill for being too lenient toward crypto companies, continues to exert pressure.
My expertise: This conflict is a classic example of a struggle over cash flow. Banks see stablecoins as a direct threat to their deposit monopoly, and their demands to tighten the CLARITY Act are entirely rational. The question is whether Congress can find a compromise between innovation and protecting the traditional banking system, or whether we will see a prolonged regulatory stalemate that stalls the development of the entire industry in the U.S.