A coalition of top US banking trade groups is warning that new language in the proposed Clarity Act would allow crypto companies to evade restrictions on stablecoin yield, potentially undermining traditional banks.
The compromise draft, from Senators Thom Tillis and Angela Alsobrooks, would ban rewards on stablecoins that are "economically or functionally equivalent" to bank deposit interest. However, it would allow rewards tied to governance, validation, staking, or account balances.
In a letter Friday, six banking groups representing Wall Street and community banks called those exceptions "overbroad." They urged lawmakers to tighten the language, arguing it would incentivize customers to favor stablecoins over traditional deposits.
Senator Tillis has signaled he disagrees with the banks' interpretation and is prepared to push ahead with a committee vote. The bill faces a tight timeline before Congress shuts down for the November midterms.