The American Bankers Association is lobbying US senators ahead of this week’s Senate Banking Committee markup of crypto legislation, warning that proposed stablecoin rules could incentivize consumers to move deposits out of banks.
In a Sunday message to member bank CEOs shared on X by Punchbowl News reporter Brendan Pedersen, ABA president and CEO Rob Nichols said the current version of the CLARITY Act does not adequately prevent crypto companies from offering interest-like rewards tied to payment stablecoins.
Nichols urged bankers to contact senators and encourage employees to do the same before Thursday’s committee markup, describing the issue as an “urgent advocacy fight” for the banking industry.
“The legislation would permit stablecoin issuers and associated business partners to pay interest or interest-like incentives to stablecoin holders,” Nichols wrote, adding that the provision could create “a digital asset loophole” that would allow deposits to migrate outside the traditional banking system.
Source: Brendan Pedersen
Nichols said the ABA had been “working hard behind the scenes for months” on the issue and warned that allowing non-bank stablecoin issuers to offer interest-like incentives could threaten “economic growth and financial stability.”
The latest lobbying effort follows a Friday letter from the ABA and other major US banking associations urging Senate lawmakers to strengthen the bill’s stablecoin yield restrictions, arguing the current language still allows structures that could incentivize users to move deposits out of banks.
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CLARITY Act stablecoin yield fight continues ahead of Senate vote
The CLARITY Act, which aims to establish a federal regulatory framework for digital assets and is scheduled for a Senate Banking Committee vote on Thursday, has fueled months of debate between banks and the crypto industry over stablecoin yield provisions.
In April, the ABA criticized a White House report that said banning stablecoin yield would have only a limited impact on bank lending, while Bank of America CEO Brian Moynihan warned earlier this year that such products could pull as much as $6 trillion out of the banking system.
Crypto companies, meanwhile, have pushed back against the banking industry’s position, with Coinbase CEO Brian Armstrong among the most vocal critics of banks for offering near-zero interest rates on customer deposits while opposing yield-bearing stablecoin products.
X post Sept. 29, 2025. Source: Brian Armstrong
Earlier this month, lawmakers attempted to strike a compromise by publishing updated stablecoin yield provisions prohibiting crypto companies from offering interest or yield solely for holding payment stablecoins while still permitting rewards tied to “bona fide activities.” However, some banking groups argued the revised restrictions did not go far enough.
While debate over stablecoin yield provisions continues, recent polling suggests support for broader crypto legislation is growing across party lines.
A HarrisX survey of 2,008 registered US voters found that 52% support the CLARITY Act, while 47% said they would consider voting across party lines for a candidate who backed the legislation.
Prediction market Polymarket at last look gives the CLARITY Act a 65% chance of being signed into law before the end of the year, up from around 46% at the end of April. Platform users have staked $672,289 on the outcome, at last look.
Source: Polymarket
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