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The American Bankers Association is mounting an aggressive lobbying push against portions of the Senate's Digital Asset Market Clarity Act ahead of a scheduled Banking Committee markup on Thursday, warning that stablecoin provisions in the updated bill could still undermine bank deposits and weaken financial stability. In a call-to-arms circulated to bank executives nationwide, the group petitioned banks and their employees to contact senators immediately to demand tighter restrictions on payment stablecoins in the crypto market structure bill.
The ABA argues that the latest draft — even after months of bank lobbying, meetings and input — still leaves room for crypto firms to offer interest-like rewards that may encourage consumers to move money out of traditional bank accounts. Banking trade groups maintain that yield-bearing stablecoins could act as substitutes for insured deposits, draining funding that banks rely on to originate mortgages, business loans and other forms of credit. ABA economists have separately warned that permitting yield on stablecoins could rapidly scale the market from roughly $300 billion today to as much as $2 trillion.
Why it matters
The fight over yield has already complicated the Senate's GENIUS Act, the stablecoin-focused bill that advanced earlier in the cycle, and it now threatens to slow the broader market-structure push. Lawmakers eventually negotiated a compromise that would prohibit stablecoin yield resembling deposit interest while permitting activity-based rewards programs modeled on credit-card points — but major banking groups say that carve-out is still too loose and have continued pressing Congress for stricter guardrails.
Market impact
The dispute carries a hard legislative clock: only about 10 weeks of Senate floor time remain before the midterm elections, and competing interests are bidding for that bandwidth. The White House Council of Economic Advisers has argued that stablecoin deployment would not damage the banking system; the ABA countered in April that the administration framed the wrong question, since the risk lies in allowing yield rather than banning it.
Frequently asked questions
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What is the Clarity Act and what does it do?
The Digital Asset Market Clarity Act is the Senate's crypto market-structure bill. It draws up the regulatory perimeter for digital assets, including payment stablecoins, and is heading for a Senate Banking Committee markup on Thursday.
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Why are banks fighting stablecoin yield in the Clarity Act?
Banking trade groups argue that yield-bearing stablecoins could substitute for insured deposits, draining the funding banks rely on for mortgages and business loans and threatening financial stability.
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How big could the stablecoin market get if yield is allowed?
ABA economists have warned that permitting yield-bearing stablecoins could rapidly scale the market from roughly $300 billion today to as much as $2 trillion, intensifying pressure on bank funding.
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What was the earlier GENIUS Act compromise on stablecoin yield?
Lawmakers negotiating the GENIUS Act earlier in the cycle agreed to prohibit stablecoin yield that resembles deposit interest while allowing activity-based rewards programs modeled on credit-card points. Major banking groups have continued to push for tighter guardrails.
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How much time does Congress have to pass crypto legislation?
About 10 weeks of Senate floor time remain before the midterm elections, and competing policy priorities are bidding for that bandwidth, raising the risk that comprehensive crypto legislation stalls before a final vote.
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