CLARITY Act Faces New Opposition From 78 Banking Groups Over Stablecoin Rules

Seventy-eight banking organizations sent a joint letter to Senate leaders Monday, warning that the CLARITY Act’s stablecoin provisions could allow digital tokens to function as deposit substitutes — pulling money away from community banks and undermining the local lending they support. 

The letter was signed by the American Bankers Association (ABA), the Independent Community Bankers of America, and 76 state banking associations, addressed to Senate Majority Leader John Thune and Minority Leader Charles Schumer.

The CLARITY Act’s Stablecoin Yield Problem 

The groups expressed support for responsible digital asset innovation and acknowledged that engagement with lawmakers had already produced meaningful improvements to the legislation. But they identified one section as still falling short — Section 404, which governs stablecoin yield and interest provisions. 

“Significant questions remain regarding whether the current language in Section 404 provides sufficient clarity and certainty to achieve that objective,” the associations wrote, warning that “ambiguities in the bill” could allow stablecoin arrangements to function as deposit substitutes. 

The letter further says that if stablecoins begin to pull deposits away — even indirectly, through yield-like incentives that make holding them financially attractive — those lending pipelines shrink. The associations wrote:

Ensuring that stablecoin regulations draw clear and enforceable boundaries around interest- and yield-like incentives is therefore essential to preserving the flow of credit that local communities depend upon. 

Three Disputes, One Deadline 

The letter called for targeted changes to Section 404. The groups want the prohibition on the CLARITY Act’s interest and yield clarified so it cannot be circumvented through alternative incentive structures. 

They also want the CLARITY Act’s current “functional and economic equivalent” standard replaced with a stricter “substantially similar” standard, and they want language removed that they believe creates ambiguity around rewards tied to stablecoin balances. 

“Retaining this section would negate the goals of the upfront prohibition while tying rewards directly to how much and for how long customers hold payment stablecoins in wallets or exchanges,” the associations claimed in the letter.

The stablecoin yield question is one of three disputes that have prevented the CLARITY Act from reaching a full Senate floor vote, despite the bill clearing both the Banking and Agriculture committees earlier this year.

As CryptoDepth reported Monday, the other two are the ethics provision — centered on President Trump and his family’s extensive crypto holdings, which generated approximately $1.4 billion in income last year. 

The Blockchain Regulatory Certainty Act provision, which shields non-custodial software developers from being classified as money transmitters, remains contested by law enforcement groups — though three organizations have shifted their stance toward the bill this month alone.

Monday was the busiest day the CLARITY Act has seen in weeks. Law enforcement endorsements, a presidential post invoking the late Senator Lindsey Graham, a sharp letter from Senator Elizabeth Warren demanding ethics protections, and a coordinated banking industry push on stablecoin yield — all in one day. 

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