Community banks are blocking the CLARITY Act over stablecoin payment rewards. Two Senate Republicans oppose the bill unless the provision is removed. A Sept. 15 procedural vote faces long odds.
Community banks have mounted a lobbying campaign against the Digital Asset Market Clarity Act, the stablecoin bill headed for a Senate procedural vote next month. Their target is a provision that still permits rewards for using stablecoins as a payment method.
The bankers argue those rewards would pull deposits out of small institutions and into stablecoin wallets, shrinking their capacity to lend. Over the past several weeks, their push has rattled Senate Republicans, who have close ties to locally owned lenders back home.
“They know us. Each of us knows those people personally,” Senator Mike Rounds told Punchbowl News, explaining why the bankers’ arguments had already swayed some colleagues against the bill.
Brad Bolton, CEO of the Community Spirit Bank in Alabama, said the outreach was deliberately personal. “You needed unknown community bankers like me, out in the middle of nowhere, telling the senator, this is the real effect of it,” he said.
Rewards for simply holding stablecoins were stripped from the CLARITY Act after an earlier compromise between banks and the crypto industry. Rewards tied to using stablecoins for payments remain in the text. That is what the community bankers want removed.
Two Republican senators, Josh Hawley and Jerry Moran, have declared they will oppose the bill unless the reward issue is fixed. The stablecoin reward fight adds to a second roadblock: the ethics provision, still being negotiated with the White House and not yet settled.
Senate Majority Leader John Thune has filed a procedural vote for Sept. 15. The odds of passage have sunk as the divide between the two parties and the unresolved issues appear hard to bridge. The bill’s supporters face a tight timeline, and even if the reward and ethics questions are resolved, the broader political split on crypto regulation could keep the CLARITY Act from reaching the floor.
The stablecoin compliance debate extends beyond legislation. Mastercard is testing a single-audit framework with Borderless.xyz to standardize how stablecoin issuers meet regulatory requirements, a model that could influence how lawmakers structure oversight in future bills.
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