US Banking Groups Push to Strengthen Stablecoin Reward Rules in Clarity Act

Eight U.S. banking industry groups have called for stronger regulation of stablecoin rewards under the Clarity Act, warning that current language in the legislation could permit payments akin to bank deposit interest.

The groups, including the American Bankers Association and the Bank Policy Institute, sent a joint letter to Senate leaders John Thune and Chuck Schumer, urging the removal of clauses allowing stablecoin rewards based on balance, holding period, or transaction history. They argue such provisions could undermine the distinction between stablecoin incentives and traditional interest payments.

The banking groups also oppose a 'circuit breaker' provision in the bill that would allow state treasurers to restrict rewards if significant deposit outflows occur at local banks. They contend this mechanism would only activate after damage has been done, rather than preventing it upfront.

Meanwhile, cryptocurrency industry representatives expressed disappointment over reduced legal protections for developers in a separate blockchain regulation clarity provision. However, they indicated the issue is unlikely to derail the broader bill's passage.