Banking groups urge stricter stablecoin rules in Clarity Act

78 U.S. banking groups urge Senate to tighten Clarity Act stablecoin rules, warning current provisions could let stablecoins mimic deposits and threaten community banks.

A coalition of 78 U.S. banking groups, including the American Bankers Association, the Independent Community Bankers of America, and 76 state banking associations, has sent a joint letter to Senate leaders. They are urging amendments to the stablecoin yield provisions in the Digital Asset Market Clarity Act (CLARITY), with a particular focus on Section 404. The groups argue that Section 404 still permits activity-based or transaction-based rewards, which could make stablecoins function similarly to traditional bank deposits. To address this, they propose removing ambiguous language, tightening standards, and deleting certain subsections to prevent stablecoins from acting as deposit substitutes. Emphasizing the need for clearer boundaries, the banking groups warn that the current draft could encourage deposit flight from community banks and negatively impact local lending. While supporting responsible innovation and a regulated digital asset marketplace, the coalition seeks stronger safeguards to protect the traditional banking system as the bill moves through Congress.