Banks Clash with Senate Over CLARITY Act Stablecoin Provisions

A banking group representing 134 executives and leaders has urged the Senate to revise the CLARITY Act's stablecoin provisions. The proposal, which restricts interest or yield on payment stablecoins, is opposed by some banks that are pushing for stronger language to ban indirect yield arrangements.

The signatories include Bank of America, U.S. Bank, Zions Bank, and others, who argue that rewards based on balance size or holding duration could pull funds away from bank deposits. They warn that deposit outflows could weaken local credit funding by hundreds of billions of dollars.

Patrick Witt, a White House crypto adviser, criticized the banking sector's position, pointing to what he described as a contradiction in their stance. 'Banks: We must ban the payment of interest on stablecoins to protect community bank lending!' Witt wrote, highlighting the apparent inconsistency between the CLARITY Act and the banks' requests.