Major U.S. banking trade groups are warning that compromise language in the CLARITY Act could allow crypto platforms to offer deposit-like stablecoin rewards while formally complying with a ban on passive yield. The objection, led by groups including the American Bankers Association and the Bank Policy Institute, frames the bill as a potential loophole that could redirect liquidity away from traditional bank deposits.
The Senate Banking Committee is scheduled to mark up the CLARITY Act on May 14, 2026, after final bill text and any late amendments are released. For banks, the key question is whether lawmakers will close what they see as a rewards-based path around stablecoin yield restrictions before the bill moves forward.
Banks Push for Tighter Yield Language
Banking groups argue that the compromise bans passive yield but still permits narrowly defined activity-based rewards. Their concern is that rewards tied to account balance, customer tenure or duration could become interest by another name, giving crypto platforms a way to compete directly with bank savings products.
The coalition has urged lawmakers to replace the current standard with language banning payments “substantially similar” to yield. In their view, the existing test of whether rewards are “economically or functionally equivalent” leaves too much room for product engineering around the prohibition.
Banks also point to internal analysis projecting that widespread adoption of yield-bearing stablecoins could reduce capital available for consumer, small-business and agricultural loans by as much as 20% if deposits migrate at scale. That claim positions stablecoin incentives as a bank-funding risk, not merely a crypto product-design issue.
Supporters of the compromise, including Senators Thom Tillis and Angela Alsobrooks, argue the text is more balanced. Tillis called the negotiated language a “hard-fought, balanced product,” defending a framework that blocks deposit flight while preserving payment-related utility rewards.
Competing Models Shape the Stablecoin Debate
The White House Council of Economic Advisers reached a different conclusion in its April 8 report. It estimated that a full prohibition on stablecoin yield would increase bank lending by about $2.1 billion, or roughly 0.02% of outstanding loans, while creating a net welfare cost of about $800 million.
Crypto industry representatives and some lawmakers have used the CEA analysis to argue that banking-sector warnings are overstated. Banks counter that the report models the current roughly $300 billion stablecoin market, while their concern is a future market where stablecoin adoption is materially larger.
Industry politics have already shifted around the bill. Coinbase’s CEO reversed opposition in April after public pressure, the CEA analysis and the company’s own regulatory strategy, removing one of the larger crypto-sector obstacles to the legislation.
The market stakes remain significant. Standard Chartered has estimated that up to $500 billion in deposits could move to stablecoins by 2028, a figure banks cite as evidence that stablecoin product rules could affect real deposit flows.
The legal wording now matters as much as the policy goal. If the final bill permits balance-referenced or tenure-based rewards, platforms could design stablecoin products that look economically similar to bank deposits while avoiding the same supervisory framework.
If lawmakers adopt the stricter “substantially similar” standard, stablecoin issuers would face tighter limits on incentives, rewards and customer-retention economics. That would preserve a clearer boundary between payment stablecoins and interest-bearing bank accounts.
The final definitions will determine whether stablecoins develop mainly as payment primitives with limited activity incentives or as deposit-like instruments competing directly with bank funding.
