Banking Industry Says Clarity Act Stablecoin Proposal Would Enable 'Evasion'
A coalition of major banking trade groups has voiced concern that the latest draft of the Clarity Act, a crypto regulation bill, could give digital asset companies an unfair advantage and disrupt traditional banking. Banks want the law to ban crypto companies from paying yield on stablecoins, arguing that such offerings would undermine the appeal of regular savings accounts. Crypto firms argue they should be able to compete on equal terms. After months of stalemate over this stablecoin yield issue, Senators Tillis and Alsobrooks proposed a compromise that bars rewards “economically or functionally equivalent” to interest, but allows certain exceptions, such as rewards for staking and governance or those referencing account balances. The banks argue these exceptions are too broad, allowing crypto firms to bypass the ban and divert customer funds away from banks. They urge stricter language, prohibiting any rewards tied to account balances and broadening the ban to cover any yield “substantially similar” to traditional interest. With legislative time running out before midterm elections, senators may proceed to a committee vote despite unresolved objections from the banking sector.
