134 Bank Chiefs Push Senate to Ban Stablecoin Rewards in CLARITY Act

A coalition of 134 bank leaders and state banking association officers is pushing the Senate to rewrite the CLARITY Act's stablecoin incentive rules before the bill becomes law. Their letter, addressed to Majority Leader John Thune (R-SD) and Minority Leader Chuck Schumer (D-NY), targets Section 10404 of the legislation.

That section currently restricts paying interest or yield on payment stablecoins. The bankers want it strengthened so companies cannot bypass the prohibition through rewards, incentives, or other arrangements that create similar economic benefits for holding stablecoins.

“We therefore urge the Senate to incorporate the targeted Section 10404 changes recommended by our state bankers associations before final passage,” the group wrote.

The warning centers on deposit funding. Banks argue that stablecoin products offering holding-based rewards could pull deposits away from community lenders, reducing the pool of money available for mortgages, small business loans, and agricultural credit.

“If stablecoin products are permitted to attract and retain balances through interest-like rewards or other holding-based incentives, the local funding base that supports this lending could be weakened by hundreds of billions,” the letter said.

The signatories said clear rules would allow payment stablecoins to develop while preserving the funding channels that support community lending. They argued that incentives tied to balances, holding periods, or account duration could replicate features of interest-bearing products, creating the need for clearer boundaries in the CLARITY Act.