Senator Bernie Moreno has turned the banking industry’s last-minute stablecoin lobbying push into a political flashpoint, accusing major banks of trying to protect their deposit model as the CLARITY Act heads toward a key Senate Banking Committee markup.
The trigger was a Sunday letter from American Bankers Association President and CEO Rob Nichols to bank CEOs, urging industry leaders to contact senators before the committee vote. The ABA Banking Journal said Nichols called on bankers to use the group’s advocacy platform and push lawmakers to strengthen language preventing crypto companies from offering interest-like rewards on payment stablecoins.
Nichols warned that the current proposal could “unnecessarily incentivize the flight of bank deposits into payment stablecoins,” putting economic growth and financial stability at risk. He also told bank CEOs: “We believe that committee members may not be fully aware of the risks to the economy posed by the stablecoin loophole. Your immediate engagement can make a difference.”
Moreno rejected that framing, arguing that the dispute had already been debated through the GENIUS Act and that calling the provision a “loophole” misrepresents the policy fight. His broader point was political and economic: stablecoins that allow Americans to earn better rewards on digital dollars threaten the banking sector’s ability to keep deposits cheap while earning more from lending, reserves, and other balance-sheet activity.
The bank campaign is not limited to one CEO letter. A coalition including the American Bankers Association, Bank Policy Institute, Consumer Bankers Association, Financial Services Forum, Independent Community Bankers of America, and National Bankers Association sent a joint letter to Senate Banking Chair Tim Scott and Ranking Member Elizabeth Warren on May 8.
The groups wrote that “payment stablecoin yield, or incentives that act like yield, can reduce U.S. deposits and, in turn, banks’ capacity to extend credit across the country.” They also argued that deposit flight driven by yield-bearing stablecoins could reduce consumer, small-business, and agricultural lending “by one-fifth or more.”
Their main target is Section 404 of the CLARITY Act, especially language tied to rewards, rebates, incentives, and payments linked to stablecoin balances. The letter says the current text could allow structures that look different from bank interest but still reward users for holding stablecoin balances. The groups asked lawmakers to remove “solely” from one prohibition, remove balance-specific phrasing from another, replace the “functional and economic equivalence” standard with a “substantially similar” test, and remove a provision allowing certain rewards to be calculated by balance, duration, or tenure.
That is the heart of the fight. Banks want a tighter ban on anything that resembles yield on idle stablecoin balances. Crypto firms want space for payment-linked rewards, customer incentives, and digital-dollar products that can compete with bank deposits without being treated as illegal interest accounts.
The Senate Banking Committee is scheduled to consider H.R. 3633, the Digital Asset Market Clarity Act of 2025, on May 14. The markup has already become one of the most important crypto policy events of the year because it could set federal lanes for exchanges, token classification, digital commodities, custody, and stablecoin-related market structure.
Stablecoin yield is now the most explosive late-stage issue. The Tillis-Alsobrooks compromise would restrict rewards on idle stablecoin holdings when they resemble deposit interest, while still allowing activity-based rewards tied to payment use. That split has already shaped the stablecoin-yield fight before the CLARITY markup and reopened the debate over whether digital dollars should compete directly with bank deposits.
Moreno’s attack sharpens the political divide. Banks are framing stablecoin rewards as a threat to lending, financial stability, and local credit creation. Crypto supporters are framing the same rewards as competition for a banking model that pays depositors less than the system earns from their money.
The markup will show how much influence the bank letter has with senators already split over CLARITY. If the committee tightens Section 404 further, stablecoin issuers and crypto platforms could lose room to design customer rewards around balances and payment activity. If the compromise survives, banks will face a clearer path for digital-dollar products that compete for deposits without becoming traditional bank accounts.
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