U.S. banks are breaking ranks over stablecoin yield provisions in the CLARITY Act, with divisions deepening ahead of a Senate Banking Committee markup. According to journalist Eleanor Terrett, large consumer-facing banks oppose the proposed compromise, while institutions without retail operations show support.
Retail vs. Community Banks: A Clear Divide
Some community banks have signaled support for the draft, but their main representative body, the Independent Community Bankers of America, continues to raise concerns in Washington. This internal split is reshaping how the broader industry approaches the coming legislative process.
Loopholes in Reward Structures
Critics argue the draft language is too narrow, leaving room for crypto firms to bypass restrictions. The compromise, they say, doesn't eliminate yield but changes how companies structure rewards. In a joint statement on May 4, the American Bankers Association and the Bank Policy Institute called the proposal "falls short," stressing it fails to fully prohibit yield and interest on stablecoins. Rewards tied to balance or duration could still encourage idle holdings, risking deposit migration from traditional banks.
Lobbying Campaign Expands
With tensions unresolved, banks are broadening their outreach. Trade groups now plan to engage more Senate Banking Committee members, beyond initial talks with Senators Thom Tillis and Angela Alsobrooks, per Terrett. Notably, lead negotiators indicated the issue was settled in a recent joint statement, but industry reactions suggest otherwise. The divide within banking circles remains a central factor shaping the bill's path.