Banks Clash With Tillis Over Stablecoin Yield Rules

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Banks Say Stablecoin Yield Language Falls Short, Senator Tillis Disagrees

Five major banking groups in the US have jointly stated that a part of the proposed Clarity Act, specifically regarding returns on stablecoins, doesn’t adequately safeguard bank deposits.

Five industry groups supported the senators’ aims but asked for the proposal to be made more robust. These groups were the American Bankers Association, the Bank Policy Institute, the Consumer Bankers Association, the Financial Services Forum, and the Independent Community Bankers of America.

US Banks Want Tighter Stablecoin Yield Language in Clarity Act

Senators Thom Tillis and Angela Alsobrooks have reached a bipartisan agreement on how stablecoins will work. This deal follows months of discussions involving banks, the White House, and companies in the cryptocurrency industry.

This rule prevents rewards based simply on holding deposits, but still allows incentives for actual use of the platform. Banking groups have recognized the senators’ work to prevent customers from withdrawing their deposits en masse. They plan to offer suggestions that will both support local lending and encourage new ideas.

Senators Tillis and Alsobrooks want to stop stablecoins from earning interest or yields, which is a good objective. However, their current proposal doesn’t quite achieve that. It’s crucial that Congress gets this policy right, according to a recent statement.

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Banking industry groups are especially concerned about Section 404, which allows cryptocurrency exchanges to offer rewards to users through membership programs as long as those rewards aren’t designed like traditional bank interest. These groups argue this creates a significant loophole that Congress needs to address.

Critics also raised concerns about rewards based on how long someone held the stablecoin, their account balance, and how long they’d been a customer. Banks explained that this system essentially pays people for simply holding onto the stablecoin, which goes against the goal of preventing a large outflow of deposits.

Over the next few days, we’ll be sharing specific recommendations with lawmakers to improve the proposed legislation. We remain committed to working with Congress to encourage innovation while also safeguarding deposits, which are essential for local banks to fund loans and support economic growth in communities nationwide.

Tillis Defends the Compromise

Senator Tillis responded on Monday, stating that banks were involved in the negotiations for several months, having been part of the discussion from the beginning.

We’ve agreed that rewards offered by stablecoins shouldn’t function like interest earned on traditional bank deposits – that was our main worry about people moving money out of banks. While some banks might not want either of these outcomes, we respectfully acknowledge that we have differing opinions.

Senator Tillis cautioned against holding out for an ideal solution that could prevent achieving a workable one. He indicated that various groups will share specific proposals in the coming days, before the Senate Banking Committee begins reviewing and amending the legislation later this month.

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2026-05-05 12:16