Banks escalate stablecoin rewards fight as Senate prepares for a Clarity Act vote
A coalition of banking groups is lobbying the U.S. Senate to tighten regulations on stablecoin rewards in the upcoming Clarity Act. Banks argue that current provisions could allow crypto companies to offer interest-like rewards, potentially siphoning deposits away from traditional financial institutions.
Why it matters
The dispute highlights the ongoing regulatory tension between traditional banking and the emerging cryptocurrency sector regarding financial stability and consumer protection.
Eight groups, including the American Bankers Association, Bank Policy Institute and Independent Community Bankers of America (ICBA), wrote Senate Majority Leader John Thune and Democratic Leader Chuck Schumer on Monday, seeking changes to the Clarity Act ahead of the Senate’s vote on Tuesday.
The groups argued that the latest draft of the bill leaves opportunities for crypto companies to pay rewards that function like interest on bank deposits, arguing that that could encourage customers to move money away from banks and into stablecoins.
This has been an ongoing dispute between banks and the crypto industry as stablecoins have grown into a market worth hundreds of billions of dollars, with crypto leaders saying that banks are overstating the threat from stablecoin rewards and the competing nature of them with bank deposits.
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