Clarity Act stablecoin rewards face fresh push for tighter limits
Banking groups want the Senate to close what they call loopholes in stablecoin-reward rules, while the bill’s latest status remains unclear.
By Theo Nakamura · Staff Writer
· 3 min read
Banking trade groups are pressing senators to tighten the CLARITY Act stablecoin rewards rules, arguing that the bill could otherwise permit incentives that resemble interest on bank deposits. For investors, the dispute is about the limits Congress may place on rewards connected to payment stablecoins, tokens typically pegged to the dollar, rather than a change to stablecoin reserve or redemption requirements.
A Sept. 14 report by Decrypt, republished by Yahoo Finance, said eight groups wrote Senate Majority Leader John Thune and Minority Leader Chuck Schumer seeking narrower exceptions in the bill’s stablecoin provisions. The report said the groups included the American Bankers Association, Bank Policy Institute and Independent Community Bankers of America.
The groups’ concern is that companies could offer payments linked to a customer’s stablecoin holdings in ways that, in the banks’ view, function like deposit interest. They said interest is often calculated by reference to a customer’s balance, holding duration and tenure.
What changes do banks want in stablecoin rules?
According to the Sept. 14 report and earlier banking-industry advocacy, the requested edits focus on Section 404 of the CLARITY Act:
- Delete the word “solely” from a restriction on payments associated with holding payment stablecoins.
- Replace a “functional and economic equivalent” standard with a broader “substantially similar” test for prohibited interest-like incentives.
- Remove language that banks say could allow otherwise permitted rewards to depend on a customer’s balance, duration of holding or tenure.
The American Bankers Association and the Independent Community Bankers of America made the same core requests in a July 13 letter joined by 76 state associations. The associations said unclear language could allow payment stablecoins to become substitutes for bank deposits. A July 14 secondary report described a proposed deletion of Section 404’s subsection 3(B), alongside the other requested wording changes.
Banks say deposit outflows would reduce funds available for mortgages, small-business finance and agricultural lending, with community lenders especially exposed. That is an industry argument, not a documented outcome: Decrypt’s September report said the letter included no estimate of prospective deposit flight and no evidence that the predicted reductions in lending had occurred.
The campaign did not begin with the latest reported letter. In May, six national trade associations, including the ABA, BPI, Consumer Bankers Association, Financial Services Forum, ICBA and National Bankers Association, asked Senate Banking Committee leaders for similar technical revisions. Those groups said yield-like stablecoin incentives could weaken deposits and reduce bank lending, while presenting their position as a risk rather than an established result.
Where does the CLARITY Act stand?
The bill, H.R. 3633, passed the House 294-134 in July 2025 and was reported to the Senate with a substitute amendment on June 1, 2026, according to Congress.gov. The congressional entry in the supplied record lists an Aug. 8 cloture motion on proceeding to the measure as its latest action.
The Sept. 14 report described a procedural Senate vote planned for the following Tuesday after a revised bill was released. But the supplied congressional record does not confirm that timing or show the purported later Section 404 text. That leaves the banks’ requested edits clear, while the status of any newer legislative compromise remains unverified in the available record.
This story draws on original reporting from Decrypt.
