US Senate Reviews Crypto Bill as Banks Lobby Over Stablecoin Yields

The GENIUS Act, signed into law in July 2025, barred stablecoin issuers from paying interest directly to holders but left room for exchanges and affiliated platforms to offer rewards. Banks say such products resemble deposits without equivalent capital, supervision or Federal Deposit Insurance Corp. protection. Crypto companies counter that lenders are using legislation to defend low-cost deposits and the interest spread they generate, pushing the dispute into negotiations over the CLARITY Act.

The fight now centers on Section 404 of the CLARITY Act. On July 13, 2026, 78 banking groups led by the American Bankers Association and Independent Community Bankers of America urged Senate leaders to close what they called a rewards loophole, citing estimates that deposit outflows could reach $6.6 trillion. Crypto advocates point to savings rates as low as 0.01%, compared with stablecoin rewards of about 3.75%, and argue consumers should be allowed to choose the higher return.

The CLARITY Act seeks to divide oversight of digital assets between the US Securities and Exchange Commission and the Commodity Futures Trading Commission. The House passed it by 294–134 on July 17, 2025. Senate consideration has stalled over stablecoin yield: the American Bankers Association fears deposit outflows from community banks, while Coinbase opposes restrictions on rewards. The dispute has become pivotal to the market structure bill’s prospects.

After roughly nine months of negotiations, the two senators proposed on May 4 banning passive yield that functions like a bank deposit while preserving rewards tied to activities such as transactions. The White House Council of Economic Advisers estimated that a total interest ban would increase bank lending by only $2.1 billion. The Senate Banking Committee advanced the bill by 15–9 on May 14, but Alsobrooks said on June 5 that she would not support a floor vote until agreements were reached on ethics and illicit-finance provisions.

The US Congress is advancing the CLARITY Act, which seeks to define the respective authority of the Securities and Exchange Commission and the Commodity Futures Trading Commission over digital assets. The bill has implications for trading platforms, stablecoins and developer liability, but the Senate Banking Committee must first resolve regulatory disagreements before sending it to the full Senate for a vote.

Senators filed more than 100 amendments ahead of the committee's May 14 markup. Democratic Senator Elizabeth Warren submitted more than 40 proposals covering stablecoin yield, protections for software developers and ethics rules for public officials, including provisions targeting Trump. Committee Chairman Tim Scott declined to hold a separate vote on a banking industry-backed proposal to restrict yield.

Stablecoins use fiat currency reserves to maintain their value and have gradually become a settlement tool for payments and crypto markets. The United States enacted the GENIUS Act on July 18, 2025, generally allowing only qualified issuers to issue stablecoins domestically. The law brings reserves, redemptions, capital and oversight under a federal framework, affecting market access for banks, nonbank firms and foreign issuers.

The Office of the Comptroller of the Currency proposed rules on February 25, 2026, covering reserve assets, custody, redemptions, risk management, audits, registration and capital backing. The comment period runs through May 1. The following day, Comptroller Jonathan Gould testified before the Senate Banking Committee alongside officials from the Federal Reserve and FDIC, with stablecoins and digital assets emerging as key regulatory topics.

Stablecoins typically maintain their value through reserves such as US dollars or Treasury securities. Issuers earn interest on those reserves, while platforms offer rewards to encourage users to hold the tokens. The US GENIUS Act already prohibits issuers from paying interest directly. If the Senate’s Digital Asset Market Clarity Act also blocks third-party yields, it would affect Circle and Coinbase, reshape competition with bank deposits and potentially drive innovation overseas.

Takatoshi Shibayama, Ledger’s head of Asia-Pacific, said on March 16, 2026, that markets including Australia could consider filling the gap if the United States imposes a blanket ban on stablecoin yields. After details of a revised draft emerged on March 24, Circle shares plunged 20% intraday, wiping roughly $5.6 billion from its market value, while Coinbase fell nearly 10%. The disputed provision has stalled Senate negotiations.