Fraser Warns Stablecoin Rewards Could Hurt Banks Amid CLARITY Act Push

Citigroup CEO Jane Fraser supports passing the CLARITY Act, but wants changes to its stablecoin reward rules. She warned that stablecoin rewards could pull deposits from banks and reduce their ability to provide credit.

The dispute stems partly from the way stablecoin rewards are structured. The GENIUS Act prevents payment stablecoin issuers from directly paying interest or yield to holders, but crypto exchanges and other service providers have used rewards programs that can pass benefits to users through arrangements not directly offered by the stablecoin issuer.

A Senate compromise would ban rewards for simply holding stablecoins while allowing incentives tied to payments and transactions. The proposal separates passive yield from rewards linked to actual platform activity, which has been a key issue between banks and crypto firms ahead of the Senate vote.