Banks Push Senate as Clarity Act Vote Approaches

Eight major U.S. financial trade groups, including the American Bankers Association and the Bank Policy Institute, have petitioned Senate leadership to amend the Clarity Act ahead of Tuesday's vote. The coalition argues that the current legislative draft fails to sufficiently restrict crypto platforms from offering yield-bearing rewards on stablecoin holdings, which they fear mimics interest on bank deposits. By allowing these reward programs, banks contend that the bill incentivizes customers to migrate capital from traditional banking institutions into digital dollar products. The groups specifically requested that Congress close loopholes that permit intermediaries to structure rewards based on account balances or holding periods. Furthermore, the coalition criticized the proposed deposit-flight circuit breaker, arguing that regulatory intervention should not be delayed until significant deposit losses have already occurred at community banks. Treasury Secretary Scott Bessent has defended the bill, asserting that it provides the necessary authority to protect community banks while fostering domestic stablecoin infrastructure. As the Senate prepares to vote, lawmakers face a critical decision on whether to tighten these restrictions or maintain the current framework favored by the crypto industry. This debate highlights the ongoing tension between traditional banking interests and the emerging digital asset sector regarding the regulation of stablecoin-based financial products.