A coalition comprising eight American banking associations is once again petitioning the Senate to strengthen the Clarity Act’s prohibitions on stablecoin interest and rewards, intensifying the ongoing conflict between the financial sector and the digital asset industry regarding whether firms ought to be permitted to distribute rewards on stablecoins.
As many as eight organizations, which include the Independent Community Bankers of America (ICBA), the Bank Policy Institute, and the American Bankers Association, addressed a letter on Monday to Democratic Leader Chuck Schumer and Senate Majority Leader John Thune to push for modifications to the Clarity Act ahead of Tuesday’s Senate vote.
The associations asserted that the current version of the legislation still provides loopholes enabling digital asset companies to disburse rewards that mimic interest on traditional bank deposits, warning that such mechanisms could incentivize users to withdraw funds from commercial banks and purchase stablecoins.
This has remained a persistent disagreement between traditional financial institutions and the cryptocurrency space as stablecoins have expanded into a multi-hundred-billion-dollar market, with digital asset proponents countering that banks exaggerate the risk posed by stablecoin incentives and their direct substitution effect against bank deposits.
Existing federal regulations currently prohibit stablecoin creators from providing direct yield, yet leave open avenues for third-party intermediaries and exchanges to distribute rewards. Financial institutions are now pushing lawmakers to establish a much clearer boundary.
Within their correspondence, the coalition specifically criticized the proposed deposit-flight “circuit breaker,” which would empower regulatory bodies to step in if stablecoins initiate considerable drains on banking deposits.
“An emergency stop mechanism that only triggers after significant deposit drainage has already taken place fails to function as a protection mechanism whatsoever,” the organizations stated.
U.S. Treasury Secretary Scott Bessent defended this strategy via a statement on X, noting that the revised legislation equips the Treasury Secretary with extra powers to react if stablecoins start damaging community financial institutions.
“Should stablecoins inflict damage upon community banks, I will not hesitate to deploy these instruments to guarantee their complete safeguarding,” Bessent wrote, while describing the Clarity Act as “vital for guaranteeing the United States secures victory in the international competition for emerging technology.”
Bessent presented the measure as a mechanism to balance the administration’s backing of stablecoins alongside the safeguarding of local lenders. He explained that the executive branch desires both digital asset innovation and community banks to bolster American economic expansion, referencing the previous year’s GENIUS Act as an initiative ensuring stablecoin architecture develops domestically.
The ICBA released additional particulars in an independent letter, explaining that the provision would span an 18-month timeframe following enactment and could activate measures if regulators conclude that capital flows into payment stablecoins have inflicted a “substantial detrimental impact” on the reserves of community institutions possessing under $10 billion in total assets.
Furthermore, they urged legislators to strike down provisions permitting specific rewards to scale based upon a user’s stablecoin balance and holding duration, contending that such parameters allow a reward scheme to mimic a traditional savings account.
UPDATE (Sep 14, 18:02 UTC): Incorporates an X statement by Treasury Secretary Scott Bessent defending the legislation’s safeguards against deposit flight for community banks.
Originally published at https://www.coindesk.com/policy/2026/09/14/banks-escalate-stablecoin-rewards-fight-as-senate-prepares-for-a-clarity-act-vote.
