- Major U.S. banking groups want stricter stablecoin rules.
- Banks warn yield incentives could pull deposits away from community banks.
- The proposed changes target the Senate's Clarity Act.
- The bill is currently awaiting a Senate vote.
Major U.S. banking organizations are urging lawmakers to tighten stablecoin provisions in the Clarity Act, arguing that the current language could allow stablecoins to compete directly with traditional bank deposits.
The American Bankers Association, the Independent Community Bankers of America, and 76 state banking associations sent a joint letter calling for stronger safeguards around stablecoin rewards and yield programs.
Although the bill prohibits issuers from paying direct interest on payment stablecoins, the groups argue that activity-based rewards and similar incentives could still encourage users to hold stablecoins instead of using them for payments.
According to the banking groups, large-scale migration of deposits into stablecoins could reduce funding for mortgages, small business lending, agricultural financing, and other services provided by community banks.
The Clarity Act is currently awaiting a Senate vote, with stablecoin regulations remaining one of the key issues lawmakers are negotiating.
