Key Points
- Major US banks oppose stablecoin reward provisions in the CLARITY Act.
- Banks cite capital disparities and competitive imbalance under SAB 121.
The American Bankers Association and the Bank Policy Institute have formally opposed stablecoin reward provisions in the latest draft of the Digital Asset Market Clarity Act, known as the CLARITY Act.
In a joint statement issued May 4, 2026, the groups urged Senators Thom Tillis and Angela Alsobrooks to revise language they argue could weaken protections for traditional bank deposits.
They indicated that detailed amendment proposals would be submitted to lawmakers within days, signaling an intensified lobbying effort.
Stablecoin Rewards and Legislative Disputes
The CLARITY Act passed the House in July 2025 with bipartisan support, proposing a federal framework for digital asset oversight.
In the Senate, debate has centered on whether payment stablecoins should be permitted to offer rewards tied to balance size or holding duration.
The current compromise draft prohibits traditional interest but allows certain balance-based incentives, which banking groups contend resemble yield-bearing products.
Industry representatives argue such features could shift funds away from regulated deposits, potentially affecting bank lending capacity, although digital asset firms dispute those projections.
The debate reflects broader questions over who can issue dollar-denominated digital instruments at scale and under what regulatory standards.
SAB 121 and Competitive Concerns
Banking organizations also point to SEC Staff Accounting Bulletin No. 121, which requires banks to hold capital against crypto assets they safeguard for customers.
They argue this requirement creates an uneven landscape compared to non-bank stablecoin issuers operating under state-level or offshore regimes.
Stablecoins such as Circle’s USDC and Tether’s USDT currently dominate the market, while bank-issued alternatives face higher compliance and capital costs under existing guidance.
The banking sector maintains that unless the legislation addresses these capital asymmetries, federally supervised institutions may remain at a structural disadvantage.
Meanwhile, parts of the crypto industry, including Coinbase, have publicly supported the Tillis-Alsobrooks compromise and opposed additional bank-driven amendments.
Prediction markets and research firms have shown divided expectations regarding the bill’s passage, noting the Senate’s 60-vote threshold and competing legislative priorities.
The White House has expressed support for digital asset legislation, adding further political considerations as lawmakers continue negotiations over the final framework.
