- Eight banking trade groups urged Senate leaders to tighten restrictions on stablecoin rewards
- The groups want to delete language allowing rewards tied to balances, duration or tenure
- The proposed deposit-flight safeguard would take effect too late, according to the groups
Eight banking trade groups sent a letter Monday to Senate leaders John Thune and Chuck Schumer urging stricter limits on stablecoin rewards under the Clarity Act. The groups argue the bill’s current language contains loopholes that could allow interest-like payments to draw deposits away from banks, according to the letter.
Signatories include the American Bankers Association, Bank Policy Institute, and Independent Community Bankers of America, representing both large banks and community lenders. The letter arrives ahead of a key Senate procedural vote scheduled for Tuesday.
The groups specifically want to remove “solely” from a restriction on payments connected with holding stablecoins and replace an equivalence standard with a “substantially similar” test. “We believe that the way the current legislative text is drafted provides loopholes and avenues for the prohibition to be easily evaded,” the group wrote.
A separate request would delete language allowing permissible rewards to depend on a customer’s balance, duration or tenure. “Given that interest payments are often calculated by reference to duration, balance and tenure, this subsection appears to contradict the initial prohibition,” the groups wrote.
Banks argue such incentives could attract money they otherwise use to fund mortgages, farms, and small businesses. Community and mission-driven lenders could be particularly exposed, the letter states.
The groups also rejected a proposed deposit-flight “circuit breaker” that would allow regulators to respond only after substantial outflows. “A circuit breaker that activates only after substantial deposit flight has already occurred is not a safeguard at all,” the group wrote.
The dispute has spread to senators’ home states, where community bankers push for tighter restrictions while crypto advocates rally support for the bill. Crypto firms argue that stablecoin rewards should remain available and that the industry needs clearer federal rules.
The letter renews demands made by six banking trade groups in May, including restrictions on rewards tied to account balances and adoption of a “substantially similar” standard. Predictions on whether Congress will pass the Clarity Act in 2026 remain active on prediction markets.
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