Nearly 80 state bankers associations today joined with the American Bankers Association and Independent Community Bankers of America to press lawmakers to use the Clarity Act to close the payment-of-interest loophole for payment stablecoins, which will provide “the clearest path to achieving Congress’ stated objective of preserving local lending by reducing the risk of unintended consequences for local economies.”
The Clarity Act would create a regulatory framework for cryptocurrencies and other digital assets. The Senate is expected to take up the bill when it returns from recess next week.
In a letter shared with all senators, the associations offered specific, targeted word changes in the bill to close a loophole that allows digital asset service providers to avoid the existing prohibition on stablecoin interest and yield. Failing to do so will lead to deposit flight from community banks, taking away funds needed to support local lending, they warned.
“For community financial institutions, the consequences of deposit flight are not theoretical,” the associations said. “Deposits gathered in cities, towns and rural communities are reinvested through mortgage lending, small-business financing, agricultural credit and other forms of relationship banking that support local economic growth. 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.”
