U.S. Banking Groups Seek Changes to CLARITY Act Stablecoin Yield Provisions

The CLARITY Act is intended to establish a clearer U.S. regulatory framework for digital-asset markets, but its fate has become entangled with a dispute over stablecoin rewards. The American Bankers Association and community-bank advocates argue that interest-like incentives could pull deposits away from institutions that fund mortgages, farms and small businesses. Critics counter that large banks have already eroded smaller rivals’ deposit bases through superior technology and scale, making stablecoins a convenient target in a broader lobbying battle.

ABA Chair Kenneth Kelly said on Sept. 2 that community banks were acting independently, rejecting claims that Wall Street had enlisted them as political cover. He urged lawmakers to close the stablecoin-interest loophole before the Senate reconvenes on Sept. 14, ahead of a Sept. 15 procedural vote requiring 60 votes. Critics highlighted the competitive imbalance: JPMorgan spends nearly $20 billion annually on technology, while a typical community bank with $500 million in assets spends about $4 million, much of it maintaining legacy systems.

The Digital Asset Market Clarity Act seeks to divide oversight of crypto assets between the US Securities and Exchange Commission and the Commodity Futures Trading Commission while complementing stablecoin rules. The House passed the measure on July 17, 2025, by a 294-134 vote. Its final shape matters to banks because privately issued digital money could affect deposits, payment-system safeguards and competition across financial services.

American Bankers Association President and Chief Executive Officer Rob Nichols said in August 2026 that the group wants Congress to strengthen the Clarity Act, not dismantle it. The ABA is pressing lawmakers to close regulatory gaps involving stablecoins and other crypto assets while preserving room for responsible digital-finance innovation. Its position frames stronger guardrails as necessary to protect financial stability and maintain comparable rules for banks and nonbank issuers.

The Digital Asset Market Clarity Act would establish a federal framework for U.S. crypto markets, giving the Commodity Futures Trading Commission a central role over digital commodities while preserving parts of the Securities and Exchange Commission’s authority. The House passed H.R. 3633 by 294-134 on July 17, 2025. Supporters say the legislation would replace years of regulatory uncertainty with clearer rules for issuers, trading platforms and investors, while its treatment of stablecoin rewards has become a major fault line between crypto companies and traditional banks.

Goldman Sachs CEO David Solomon said on July 23, 2026 that the bill was “not perfect” but would create a level playing field, bolster market stability and move innovation forward. BlackRock, Fidelity, Franklin Templeton and SoFi also endorsed the measure in the following days. JPMorgan Chase and other banks remain concerned that crypto firms could offer yield-bearing stablecoin products resembling deposits without equivalent oversight. The Senate has yet to schedule immediate action, with its summer recess beginning August 8 and unresolved ethics provisions further narrowing the voting window.

The U.S. Senate’s 616-page Digital Asset Market Clarity Act proposal seeks to establish a federal market structure for digital assets and delineate oversight between the Securities and Exchange Commission and Commodity Futures Trading Commission. Its stablecoin provisions address a central dispute between banks and crypto firms: whether payment tokens should compete with deposits. The draft treats payment stablecoins as uninsured digital cash for transactions and settlement, not as deposits or investment products.

An analysis published July 22 said the proposal would bar crypto platforms from paying U.S. customers interest solely for holding payment stablecoins. Rewards could remain permissible when linked to payments, remittances, liquidity provision, collateral, staking, governance or loyalty programs. If enacted, the SEC, CFTC and Treasury Department would have one year to jointly clarify the boundary and publish a nonexclusive list of permitted programs. Knowing and willful violations could draw civil penalties of as much as $5 million per violation.

The CLARITY Act seeks to establish a U.S. market structure for digital assets, a step broadly expected to reduce regulatory uncertainty across crypto. Mizuho, however, says clearer rules could invite more institutional-scale stablecoin issuers and further commoditize Circle’s USDC, pressuring revenue over time. Circle currently retains about 38% of USDC reserve income after sharing proceeds with distribution partners including Coinbase and Binance.

Republicans released the latest bill text on July 22, 2026, positioning it for a possible full Senate vote as soon as the following week. Mizuho analysts led by Dan Dolev cited Open USD, backed by more than 140 financial, technology and crypto companies, as a competitive threat. The firm kept its $50 price target on Circle; the shares traded near $67, down about 6% that day. Circle’s distribution agreement with Coinbase could be renegotiated as early as August.

The CLARITY Act aims to establish regulatory responsibilities for the U.S. digital asset market. The dispute centers on whether Section 404 can prevent stablecoins from effectively paying interest through rewards. Banks fear funds could move from FDIC-insured deposits into stablecoins, weakening lending for mortgages, small and medium-sized businesses, and agriculture. The Treasury Department estimates that as much as $6.6 trillion in deposits could be at risk of outflows.

On July 13, the American Bankers Association, the Independent Community Bankers of America and 76 state banking associations urged bipartisan Senate leaders to tighten Section 404. The bill passed the Senate Banking Committee by a 15–9 vote on May 14, but no date has been set for a floor vote. That uncertainty could make it difficult to enact the legislation before the November 2026 midterm elections.

Stablecoins are generally pegged one-to-one to the U.S. dollar and were originally designed for payments and trade settlement. The GENIUS Act, enacted in the United States on July 18, 2025, bars issuers from paying interest directly, but whether platform rewards amount to indirect yield remains a point of contention in the CLARITY Act debate. The American Bankers Association, or ABA, argues that an outflow of money from banks could weaken deposit-funded community lending, citing a Treasury Department estimate that $6.6 trillion in deposits could be at risk.

On June 3, 2026, the ABA released an online survey of 2,000 U.S. adults conducted by Morning Consult, with a margin of error of about plus or minus 2 percentage points. If stablecoin yields were to reduce community lending, 57% of respondents would support a congressional ban and 19% would oppose one. Some 69% were concerned that banks would have less money available to lend, 61% favored a cautious legislative approach, and about 30% planned to buy or use digital assets within the next year.

The CLARITY Act aims to divide oversight of crypto assets between the US Securities and Exchange Commission and the Commodity Futures Trading Commission while strengthening the GENIUS Act’s restrictions on interest payments by stablecoin issuers. A central issue is whether platforms such as Coinbase may distribute rewards. Coinbase generated more than $1.3 billion in stablecoin-related revenue in 2025, and the rules could reshape platform business models and competition for bank deposits.

The US Senate Banking Committee released a revised 309-page draft on May 12 incorporating a compromise reached by Thom Tillis and Angela Alsobrooks on May 1. It would prohibit interest or yield paid solely for holding stablecoins while preserving activity-based rewards tied to transactions, payments and platform use. The committee approved the bill by a 15–9 vote on May 14 and sent it to the full Senate for consideration.

The CLARITY Act aims to establish a regulatory framework for the U.S. crypto asset market and clarify the division of oversight between the Securities and Exchange Commission and the Commodity Futures Trading Commission. Whether the bill can address stablecoin yield and rewards will affect the interests of banks and companies including Coinbase and Circle, while helping shape the institutional direction of the U.S. crypto market.

The U.S. Senate Banking Committee has released its latest draft and held a key hearing, with only 24 hours remaining before the deadline for submitting amendments. Bipartisan lawmakers are nearing a compromise over stablecoin yield, and the bill is expected to enter markup on May 11. The draft has also been sent to the White House for review. White House crypto adviser Patrick Witt is targeting passage by July 4. The developments helped push Bitcoin above $78,000, while Circle shares rose about 18% in a single day.

US cryptocurrency regulation has long relied on securities and commodities laws as well as regulators’ discretion, leaving the boundaries around token classification and developer liability unclear. Nonprofit advocacy group Coin Center says the CLARITY Act is intended to establish a framework for classifying digital assets and provide statutory protections for noncustodial blockchain developers, determining whether the industry can operate under predictable rules.

As of July 20, 2026, the CLARITY Act and related blockchain legislation remained stalled in the US Senate, with provisions including stablecoin yield among the disputed issues. No specific amount is involved. Coin Center warned that unless Congress explicitly limits regulatory discretion, future administrations could change their enforcement stance and take tougher measures against cryptocurrency companies and developers.