Banking lobby moves to kill stablecoin yield provisions in CLARITY Act ahead of May 11 markup.

A coalition of the most powerful US banking trade groups — including the American Bankers Association, the Bank Policy Institute, and the Independent Community Bankers of America — is publicly rejecting the stablecoin language drafted by Senators Thom Tillis and Angela Alsobrooks, just days before a critical Senate committee markup scheduled for the week of May 11.

The dispute centres on Section 404 of the Digital Asset Market Clarity Act, which aims to prohibit yield payments on stablecoins. The banking coalition argues the current text contains loopholes allowing crypto firms to distribute rewards tied to membership programs — effectively mimicking deposit interest. Their internal research estimates this could drain enough liquidity from traditional deposit accounts to cut lending capacity for consumers, small businesses, and agricultural borrowers by up to 20%.

Senator Tillis is…