Banking Lobby Blocks Senate Crypto Bill Over Stablecoin Rewards

The Senate's CLARITY Act, aiming to bring regulatory clarity to the US digital-asset market, has encountered resistance from the banking lobby.

Banks are opposing a provision that would allow crypto exchanges to make rewards on stablecoin deposits, arguing it would lead to 'deposit flight' and harm community banks.

The banking sector estimates that widespread adoption of yield-bearing stablecoins could drain $1.3 trillion from community-bank deposits and reduce lending by around $850 billion.

Crypto companies argue that CLARITY already prohibits passive rewards equivalent to interest-bearing deposits, but the dispute over rewards has stalled negotiations over the Senate crypto bill.