Banks Push to Close Stablecoin Yield Loopholes
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- Banking trade groups representing all major national and community banks sent a letter to the U.S. Senate Banking Committee on Friday urging revisions to the Clarity Act’s stablecoin yield provisions, citing loopholes that could enable evasion.
- Senators Tillis and Alsobrooks drafted compromise language that bans stablecoin rewards “economically or functionally equivalent” to interest on deposits, yet still allows rewards tied to governance, validation, staking, or account‑balance references.
- The banking groups asked the committee to reword the prohibition to bar any rewards referencing account balances and to replace “economically or functionally equivalent” with “substantially similar” to yield.
- The Clarity Act has been stalled for nearly four months over the stablecoin yield dispute, but crypto leaders embraced the compromise last week, moving the bill toward a Senate committee vote.
- Coinbase and other crypto firms argue they should be able to offer yield on stablecoins to compete with traditional low‑yield savings accounts, a practice banks claim would erode deposit bases.
Why it matters: Banks stand to protect deposit inflows by tightening the Clarity Act, while crypto firms risk losing the ability to market stablecoin rewards that attract savers; the bill’s final language will shape the competitive balance between digital assets and traditional savings.
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