Banking Sector Pushes for Stricter Stablecoin Rules Amid Deposit Stability Concerns

More than 130 banking association officials and bank executives have urged the Senate to revise stablecoin-related provisions in the CLARITY Act. The coalition argues that the bill must impose stricter restrictions on interest and yield payments tied to stablecoins, including banning indirect incentive mechanisms such as rewards programs.

The banking groups stressed that payment stablecoins should function strictly as a medium of exchange, not as yield-bearing instruments that compete with insured bank deposits. They warned that if stablecoin issuers are permitted to offer yield-like incentives, they could draw hundreds of billions of dollars away from traditional bank deposits.

The CLARITY Act aims to create a federal framework for stablecoin regulation. The banking industry's intervention signals a deepening divide between traditional financial institutions and the cryptocurrency sector over how digital dollar-pegged assets should be governed.