Major U.S. banking groups have publicly criticized the current draft of the CLARITY Act, stating its proposed language on prohibiting stablecoin yield fails to adequately protect bank deposits. In a joint statement, the bankers acknowledged the bill’s sponsors are seeking the correct policy goal but argued the text creates a significant loophole. This disagreement threatens to stall the bipartisan legislation’s progress in the Senate, with concerns it may not pass before the 2026 midterm elections.
America’s largest banking groups remain dissatisfied with the CLARITY Act’s newly proposed language on stablecoin yield. They argue it fails to protect bank deposits and contains a significant loophole.
In a statement, the bankers acknowledged Senators Thom Tillis and Angela Alsobrooks are “seeking to achieve the correct policy goal.” They noted, however, that the “proposed language” currently “falls short of that goal.”
The dispute has stalled the bipartisan bill, which passed the House of Representatives in July. Concerns exist that the CLARITY Act may not pass before the U.S. midterm elections in November 2026.
Banking groups cite studies suggesting widespread stablecoin adoption could lead to trillions in outflows from the U.S. banking system. They argue this could reduce consumer, small-business, and farm loans by one-fifth or more.
The bankers contested Section 404, arguing it allows crypto platforms to pay users bank-like interest outside traditional rules. “This is a significant loophole that must be addressed,” they said.
They added that they will be sharing detailed suggestions for strengthening the language with lawmakers. The groups involved include the American Bankers Association, Bank Policy Institute, Consumer Bankers Association, Financial Services Forum, and Independent Community Bankers of America.
Senator Thom Tillis said the current text strikes a compromise by prohibiting stablecoin rewards on idle balances. It allows platforms to offer other forms of customer rewards.
“Most importantly, it helps put us on a bipartisan path to pass the CLARITY Act, providing the regulatory certainty needed to foster innovation,” Tillis stated. He added, “Some in the banking industry may not want either of these things to happen, and we respectfully agree to disagree.”
The current text of the CLARITY Act was made public on Friday. Coinbase and other crypto industry members are pushing for a Senate markup next week.
