America’s largest banking groups say they are still unsatisfied with the CLARITY Act’s updated provisions on stablecoin yield, arguing the proposal does not adequately safeguard bank deposits.
In a statement released Monday, the groups acknowledged that Senators Thom Tillis and Angela Alsobrooks are aiming for the right policy outcome by restricting stablecoin yield. However, they said the current draft language “falls short” of achieving that objective.
“It is imperative that Congress get this right,” the American Bankers Association said in a joint statement alongside the Bank Policy Institute, Consumer Bankers Association, Financial Services Forum, and Independent Community Bankers of America.
Disagreements between banks and the crypto industry over stablecoin yield have stalled progress on the bipartisan bill, which passed the House of Representatives in July with a 294–134 vote. There are growing concerns the legislation may not clear Congress before the November 2026 midterm elections, potentially delaying it further.
Banking groups have repeatedly warned that widespread stablecoin adoption could trigger trillions of dollars in deposit outflows from the U.S. banking system, particularly affecting smaller community banks that may struggle to absorb such losses without turning to more expensive wholesale funding.
They also cited analysis by economist Andrew Nigrinis, arguing that yield-bearing stablecoins could reduce lending to consumers, small businesses, and farms by 20% or more—underscoring the need for a clear and transparent prohibition.
However, White House economists reported in April that banning stablecoin yield would likely have only a modest impact, increasing bank lending by about $2.1 billion, or roughly 0.02%.
The banking groups also took issue with Section 404 of the bill, arguing it leaves a “loophole” that could allow crypto platforms to offer interest-like returns to users outside traditional banking regulations.
Banking groups described the provision as a “significant loophole” that needs to be fixed, adding that they plan to present detailed recommendations to lawmakers in the coming days to strengthen the bill’s language.
Senator Thom Tillis, however, defended the current draft, saying it represents a compromise by banning rewards on idle stablecoin balances while still allowing crypto platforms to offer other types of customer incentives.
“Most importantly, it helps put us on a bipartisan path to pass the CLARITY Act, providing the regulatory certainty needed to foster innovation,” Tillis said, adding that while some in the banking sector may oppose this approach, “we respectfully agree to disagree.”
The latest version of the CLARITY Act was released on Friday, with Coinbase and other crypto industry participants urging the Senate to move forward with a markup as early as next week.
