Banking Industry Says Clarity Act Stablecoin Proposal Would Enable 'Evasion'

Key Points:

• A coalition of major banking trade groups has raised concerns that new language in the Clarity Act could benefit crypto companies by allowing stablecoin yield programs, potentially disrupting traditional banking.
• The Clarity Act aims to legalize most crypto activities in the U.S., but banks want to ban crypto firms from offering yield on stablecoins to protect traditional low-yield savings accounts.
• Senators Thom Tillis and Angela Alsobrooks proposed compromise language prohibiting rewards on stablecoins that are economically or functionally equivalent to interest, but allowing certain exceptions like governance and staking rewards.
• Banking groups argue these exceptions are too broad and could enable evasion of the prohibition, urging rewording to tighten restrictions and prevent rewards tied to account balances.
• Despite the banking groups' objections, senators appear poised to proceed with a committee vote soon, with supporters aiming for consideration within the next two weeks.