What are US banks saying about the Clarity Act?

Major US banking groups say the CLARITY Act does not go far enough to protect bank deposits. They argue the proposed rules still allow crypto firms to offer yield-like incentives. This could create competition with traditional savings accounts.

Why are banks worried about stablecoin yields?

Banks fear that if stablecoins offer attractive returns, customers may move money out of bank deposits. This could reduce the funding banks use to issue loans. The concern is especially strong for smaller community banks.

What loopholes are banks referring to?

Banking groups argue the bill allows indirect or “yield-like” rewards tied to activity. These could mimic interest without technically being classified as deposit yield. They see this as a gap that needs tightening.

What does the Clarity Act propose for stablecoin rewards?

The proposal bans rewards on idle stablecoin balances that resemble bank interest. However, it allows other incentives linked to usage or activity. This compromise is at the centre of the debate.

How did Senator Thom Tillis respond to the criticism?

Thom Tillis said the bill strikes a balance between protecting banks and supporting innovation. He emphasised that it prevents deposit-like interest while still allowing other forms of rewards. He described it as a bipartisan compromise.

How big is the potential impact on bank deposits?

Banking groups warn stablecoin adoption could lead to large deposit outflows. Some estimates suggest it could significantly reduce lending capacity. However, other studies indicate the impact may be relatively small.

What do economists say about the impact?

Some economists argue banning stablecoin yield would only slightly increase bank lending. One estimate suggested a marginal 0.02% increase. This shows disagreement on the real economic impact.

Why is this debate important for crypto markets?

The outcome will shape how stablecoins can compete with traditional finance. Clear rules could support growth, while strict limits could restrict innovation. This makes the legislation a key catalyst.

US banks warn CLARITY Act stablecoin rules fall short

Written by Heidi Cuthbert Published May. 5 2026

Major US banking groups said the latest CLARITY Act proposal on stablecoin yields does not go far enough to protect traditional bank deposits.

The American Bankers Association and other industry groups warned the current language leaves loopholes that could allow crypto firms to offer yield-like incentives, potentially drawing funds away from banks.

“It is imperative that Congress get this right,”

Banking groups said in a joint statement.

The dispute centres on whether crypto platforms can offer rewards tied to activity while avoiding restrictions on interest-like payments, a key sticking point in negotiations.

Thom Tillis defended the proposal as a compromise that bans rewards on idle stablecoin balances while allowing other incentives, and the share price was unchanged at $XX.

Banking groups argued widespread stablecoin adoption could lead to significant deposit outflows, potentially reducing lending capacity across the financial system.

The debate highlights ongoing tension between traditional finance and the crypto industry as lawmakers push to finalise regulation ahead of upcoming elections.