Banks Urge Fixes to CLARITY Act Stablecoin Yield Rules

The American Bankers Association, the Independent Community Bankers of America and 76 state banking associations sent a joint letter on Monday to Senate leaders asking for changes to the CLARITY Act’s stablecoin yield provisions. The groups argued the current text is ambiguous and could allow payment stablecoins to function as substitutes for bank deposits.

The letter said the associations support a federal regulatory framework for digital assets but raised specific concerns about wording on interest, yield and rewards. It requested revision of Section 404 to “clarify the prohibition on interest and yield and help ensure that the prohibition cannot be circumvented through alternative incentive structures.”

The banks warned the draft could prompt a shift of customer funds to crypto firms if those firms can offer yields without the capital and regulatory safeguards required of banks.

The CLARITY Act cleared the Senate Banking Committee in May. Democrats and many bankers have objected to parts of the bill on the grounds that some provisions could let crypto companies provide returns on stablecoins without bank-like oversight.

JPMorgan Chase CEO Jamie Dimon has said the banking industry will continue to “fight” the current version of the bill and has urged crypto firms that want to pay yield on stablecoins to seek banking charters.

The letter comes ahead of a House hearing on the CLARITY Act scheduled for July 17, where lawmakers will debate the bill that would establish federal rules for digital assets.

Other stakeholders have taken different positions. On July 10, the Federal Law Enforcement Officers Association sent a letter to the Senate Banking Committee endorsing the CLARITY Act while calling for stronger accountability in decentralized finance and preservation of investigators’ powers. Earlier in the month, more than 200 crypto companies and industry groups urged passage of the bill.

Market participants say language disputes and the lack of a single Senate draft complicate the bill’s prospects. Crypto firm Galaxy Digital lowered its estimate of the CLARITY Act becoming law in 2026 to 50% on June 26, citing the absence of a unified Senate Banking-Agriculture text, no firm Senate floor schedule and a narrowing window before lawmakers leave Washington for recess.

In their letter, the banking groups asked lawmakers to include statutory language that makes clear payment stablecoins are intended for transactions only and not for earning interest, a provision the associations say would prevent regulatory arbitrage.