Crypto
Eight Banking Groups Just Asked Congress to Rein In Stablecoin Rewards, and Competition Is Why
Eight of America's biggest banking groups wrote to Senate Majority Leader John Thune and Democratic Leader Chuck Schumer on Monday with an urgent request: tighten the Clarity Act's limits on stablecoin rewards before the bill moves any further. The American Bankers Association, the Bank Policy Institute and the Independent Community Bankers of America led the coalition, arguing the latest draft still leaves room for crypto companies to pay rewards that work like interest on bank deposits.
The letter zeroes in on a proposed deposit flight circuit breaker, a mechanism that would let regulators step in if stablecoins start pulling substantial deposits out of banks. The banks say a circuit breaker that activates after the deposits have already left offers little protection. They also want lawmakers to strip language that lets rewards scale with how many stablecoins a customer holds and for how long, which they say turns a rewards program into a savings account by another name.
Step back and the compliment is enormous. Banks are telling Congress, in writing, that stablecoin rewards now compete directly with bank deposits for Americans' dollars. Federal law already stops stablecoin issuers from paying yield outright, yet rewards paid through exchanges and intermediaries remain fair game, and the banking lobby wants that door closed too. An earlier letter from 77 state bankers associations joined the ABA and ICBA in the same push. Stablecoins have grown into a market worth hundreds of billions of dollars, and the industry that once overlooked them is now organizing its defense around them.
Treasury Secretary Scott Bessent pushed back on X, defending the bill's approach and saying the final draft gives the Treasury secretary added authority to protect community banks if stablecoins ever hurt them. He called the Clarity Act essential to America winning the global race for new technology, framing the administration's stance as support for both stablecoin innovation and community banks. Last year's GENIUS Act already set the federal foundation for dollar stablecoins built in the United States.
For anyone holding dollars onchain, this fight is validation in real time. The most powerful lobby in American finance is spending its political capital to slow the rewards your stablecoins can earn, which tells you exactly how valuable those rewards have become. Competition for your deposits is arriving, and savers stand to gain from every round of it.
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