US banking groups are urging lawmakers to revise the stablecoin reward language in the CLARITY Act before the Senate Banking Committee reviews the bill on May 14, 2026. Bloomberg reported that several organizations, including the American Bankers Association, sent a joint letter calling for stricter wording around incentives tied to stablecoins. The pressure comes as senators try to finish crypto legislation before the Memorial Day recess.
Debate centers on where rewards end and deposit-like returns begin
The dispute stems from a compromise reached on May 1 by Senators Thom Tillis and Angela Alsobrooks. Under that proposal, issuers would be barred from paying passive interest on stablecoins. At the same time, companies could still offer rewards linked to platform activity or transaction usage. That distinction has become the key fault line in the debate.
In a May 8 letter, banking organizations argued that the exceptions leave room for issuers to create products that closely resemble traditional deposits. They warned that such language could encourage customers to move funds out of banks. The coalition included the American Bankers Association, the Bank Policy Institute, and the Independent Community Bankers of America. Bloomberg also reported that the Consumer Bankers Association backed tighter limits on stablecoin incentives.
Senate negotiators are still racing the congressional calendar
Senate Banking Committee Chairman Tim Scott is still pushing ahead with the scheduled markup process. Lawmakers are attempting to complete negotiations before Congress begins its Memorial Day recess on May 21. Stablecoin rewards have become one of the most disputed parts of the legislation. Crypto companies had supported the compromise because it allowed activity-based incentives instead of a full ban.
According to the latest draft, the bill would prohibit rewards on idle balances while allowing other promotional programs. That leaves an open question at the center of the current fight: whether some reward structures are marketing tools or a substitute for deposit yield.
The Senate bill now reaches well beyond stablecoins
The Senate version of the CLARITY Act now spans nine sections and covers a broader digital asset framework. It sets out oversight roles for the Securities and Exchange Commission and the Commodity Futures Trading Commission, while also addressing DeFi, bankruptcy protections, banking activity involving digital assets, and anti-illicit finance rules.
The House passed its own version in July 2025 with bipartisan support. The White House is reportedly aiming for final approval of crypto legislation by July 4, 2026, but the Senate and House versions still need to be reconciled before a final vote. Coinbase executives Faryar Shirzad and Paul Grewal have publicly welcomed the recent progress, though negotiations over the stablecoin language were still active ahead of the Senate markup hearing.