US Banks Push for Stricter Stablecoin Rewards Limits
US banking groups have sent a joint letter to Senate leaders, urging them to impose stricter limits on stablecoin rewards. The eight banking groups, including the American Bankers Association and the Independent Community Bankers of America, argue that current provisions in the CLARITY Act could allow crypto companies to offer rewards similar to bank deposit interest.
This, they claim, could encourage customers to withdraw their money from banks and move it into stablecoins. The groups requested the removal of provisions that allow rewards to be tied to the amount of stablecoin held by the customer and the duration the asset is held.
The banking groups also objected to the deposit flight circuit breaker, which would allow regulators to intervene if stablecoins lead to significant losses in bank deposits. They argued that this mechanism would not provide adequate protection if it only triggers after a large amount of deposit loss has occurred.