Eight banking trade groups, including the American Bankers Association and the Bank Policy Institute, have formally requested that Senate leaders tighten restrictions within the Clarity Act. The organizations argue that current language regarding stablecoin rewards contains loopholes that could facilitate interest-like payments, potentially drawing deposits away from traditional banking institutions.
The coalition is pushing to remove specific provisions that allow rewards based on account balances, duration, or tenure. Furthermore, they propose replacing an existing equivalence standard with a broader 'substantially similar' test. These changes aim to prevent incentives that function like deposit interest, which banks claim could negatively impact funding for mortgages and small businesses.
The trade groups also criticized a proposed deposit-flight 'circuit breaker' mechanism, labeling it ineffective because it would only trigger after significant capital outflows have already occurred. They advocate for proactive measures to prohibit such incentives entirely rather than relying on reactive regulatory responses to financial instability.
This appeal precedes a scheduled Senate procedural vote on the revised Clarity Act. The current demands reiterate concerns previously raised by six banking trade groups in May. While the bill intends to establish federal oversight for digital assets, the banking sector continues to lobby for stricter limitations to protect traditional deposit bases.
