Warning of the potential fallout for banks and the communities they serve, bank leaders from across the U.S. are urging Senate leaders to use the Clarity Act to close a loophole that allows digital asset service providers to avoid the prohibition on stablecoin interest and yield.
The Clarity Act currently before the Senate would create a regulatory framework for digital assets, much like the 2025 Genius Act did for payment stablecoins. In a letter today, approximately 130 state bankers association officers said deposits are the foundation for extending credit to families, small businesses, farmers and local employers. However, if stablecoin products are permitted to attract and retain balances through interest-like rewards or other holding-based incentives, “the local funding base that supports this lending could be weakened by hundreds of billions.”
“That risk is particularly important because Congress has made clear that payment stablecoins should serve as transaction tools, not store-of-value products,” they said. “The final legislation should reflect that intent plainly and should guard against incentives tied to the holding, retention, duration, tenure, or balance of payment stablecoins that could function as interest or yield.”
The bankers offered several recommended changes to the Clarity Act, including language to revise the prohibition’s “substantially similar” standard to prevent payment stablecoin arrangements from replicating the economic features of interest payments.
Adopting the recommendations “will help ensure that payment stablecoins remain payment tools, support responsible innovation, and protect the credit channels that families, small businesses, farmers, and communities depend on,” they said.
