Major U.S. banking trade groups are making a late push to tighten the CLARITY Act’s stablecoin-yield compromise, arguing that the current language still leaves room for crypto companies to offer rewards that behave like bank deposit interest.
The Senate Banking Committee has scheduled an executive session for May 14 at 10:30 a.m. to consider H.R.3633, the Digital Asset Market Clarity Act. That gives banks only days to reopen a provision that crypto firms had treated as one of the biggest remaining obstacles to the bill’s progress.
The latest joint trade letter was sent by the American Bankers Association, Bank Policy Institute, Consumer Bankers Association, Financial Services Forum, Independent Community Bankers of America, and National Bankers Association. The groups praised the work by Sens. Thom Tillis and Angela Alsobrooks to improve Section 404, but argued that more technical revisions are needed to clearly prohibit interest-like payments on payment stablecoins.
The dispute centers on the line between rewards and yield. The compromise would block payouts that are economically or functionally equivalent to interest on bank deposits, while preserving room for rewards tied to genuine payment activity, platform usage, or transaction incentives. Banks argue that the current text still allows evasion if rewards can be tied to balance size, duration, membership programs, or other features that encourage users to park stablecoins on exchanges and wallets.
This fight is not only about wording. Stablecoins are becoming a direct liquidity battleground between banks, payment companies, and crypto exchanges. If users can earn attractive rewards on stablecoin balances outside the banking system, banks argue that deposits could move away from insured institutions and reduce their lending capacity.
The trade groups warned that incentives acting like yield could reduce U.S. deposits and weaken banks’ ability to extend credit to consumers, small businesses, and farmers. Earlier banking statements also focused on Section 404 exceptions that could allow exchanges or intermediaries to frame yield-like payments as membership rewards rather than deposit-style interest.
Crypto firms see the issue differently. They have pushed for room to offer user incentives tied to payments, transfers, trading, and other activity, especially because stablecoins are now central to exchange retention, onchain settlement, and payment routing. The current compromise helped revive CLARITY Act momentum by preserving that activity-based rewards path while restricting passive stablecoin yield.
That structure also matters for Coinbase and other platforms whose stablecoin businesses depend on balances, rewards, payments, and distribution economics. Recent Coinbase stablecoin revenue pressure has already shown why a narrow change in reward language can affect exchange business models, not only issuer compliance.
The banking push comes after Tillis and Alsobrooks signaled that the compromise had largely settled the stablecoin-yield fight. In public comments covered earlier this week, the senators defended the middle-ground approach and argued that the bill should move forward with language that blocks bank-like yield while still allowing legitimate crypto rewards.
That makes the new banking letter a late attempt to influence drafting before committee action, not proof that the markup is derailed. Reuters reported that banks have launched a last-minute effort to peel support from some Republican senators before the May 14 hearing, but the outcome remains uncertain. The committee schedule now gives the bill a formal path after months of delay, while lawmakers still have to manage ethics, illicit finance, consumer protection, SEC-CFTC authority, and Senate Agriculture coordination.
The White House’s own analysis has also complicated the banking argument. A Council of Economic Advisers report estimated that eliminating stablecoin yield would increase bank lending by $2.1 billion at baseline, equal to about 0.02% of lending, while creating an $800 million net welfare cost. Banking groups continue to cite larger deposit-flight risks, but the policy fight now turns on how senators weigh those concerns against competition, payment innovation, and stablecoin market growth.
The immediate stakes are concentrated in Section 404. If banks win tighter edits, exchanges and wallet providers could face narrower room for rewards programs tied to stablecoin balances. If the current compromise holds, crypto firms keep a path for activity-based incentives while passive, bank-like yield remains restricted. The May 14 markup now becomes the first real test of whether the Senate treats the banking letter as a final drafting issue or another attempt to reopen the fight that had already been holding the CLARITY Act in place.
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