Banks vs Stablecoins: CLARITY Act Vote Looms with Major Consequences

The CLARITY Act is set to face a Senate vote on Tuesday, with stablecoins becoming a major battleground in the US. Banks are pushing for stricter regulations on incentives for using dollar-pegged stablecoins, which they see as a threat to their funding and availability of cash.

Banks use around 80% of deposits to finance loans, according to a May report by Cryptopolitan. The CLARITY Act could determine how much room stablecoin issuers have to continue providing rewards.

The banking groups, including the American Bankers Association and Independent Community Bankers of America, are urging lawmakers to eliminate certain language from the bill. They want to strike the word 'solely' from the definition of payment based on holding and replace it with a more flexible phrase.