134 US Bank Leaders Urge Senate to Tighten Stablecoin Interest Restrictions in CLARITY Act
A group of 134 banking association officers and bank leaders from across the United States is urging the Senate to revise the CLARITY Act before final passage, warning that stablecoin incentives could challenge the role of bank deposits.
The bank leaders’ letter, addressed to Senate Majority Leader John Thune and Minority Leader Charles Schumer, calls for revisions to Section 10404 of the CLARITY Act. This section currently establishes restrictions on paying interest or yield on payment stablecoins. The banking executives want lawmakers to strengthen the provision so companies cannot bypass the prohibition through rewards, incentives, or other arrangements that create similar economic benefits for holding stablecoins.
“We therefore urge the Senate to incorporate the targeted Section 10404 changes recommended by our state bankers associations before final passage,” the letter states.
The group warned that if stablecoin products are permitted to attract and retain balances through interest-like rewards or other holding-based incentives, the local funding base that supports lending could be weakened by hundreds of billions. They argue that deposits provide the foundation for lending to families, small businesses, farmers, and local employers. Clear rules would allow payment stablecoins to develop while preserving the funding channels that support community lending.
The debate highlights a broader disagreement over the future role of stablecoins in financial markets. Bankers argue that payment stablecoins should remain focused on transactions rather than become products designed to attract long-term holdings. The banking industry has previously raised concerns about stablecoin yields as digital asset companies and policymakers examine how rewards, incentives, and reserve structures could affect competition with traditional financial institutions.
The issue has also emerged in discussions surrounding the bill’s treatment of stablecoin incentives, with disagreements over how regulators should define prohibited yield arrangements. Bank leaders say deposits remain a major source of funding for mortgages, business expansion, agricultural operations, and community investment. They argue that stablecoin products designed around holding incentives could alter those funding flows.
The proposed CLARITY Act revisions would preserve stablecoin payment innovation while limiting structures that bankers believe could replicate deposit-like incentives without the same regulatory framework applied to insured banks. The Senate’s final language on stablecoins will define how payment-focused digital assets operate within the broader U.S. financial system.