Just days before the Senate Banking Committee is set to vote on the CLARITY Act, major banking trade groups have submitted a joint letter requesting changes to a stablecoin yield compromise that they had previously agreed to.
The American Bankers Association, Bank Policy Institute, and three other leading banking lobbies sent the letter to Senate Banking Committee leadership following the official scheduling of the markup vote on May 14. This timing is strategic as the Memorial Day recess begins on May 21. If the bill does not pass the committee before then, it will be delayed for a year, resetting all negotiations.
Understanding the Compromise
The compromise reached on May 1 by Senators Thom Tillis and Angela Alsobrooks was clear. Crypto companies cannot offer passive yield on stablecoins like banks offer interest on deposits. However, rewards based on usage, transactions, and platform activity are still allowed.
Banks initially accepted this framework. However, after the markup was scheduled for May 14, the same banking groups submitted a letter urging the elimination of the entire rewards framework.
Real Concerns of Banks
While the banking lobby claims to be focused on consumer protection, their true concern is competition. They have expressed worries that yield-bearing stablecoins could significantly reduce loans to consumers, small businesses, and farms by over 20%.
If consumers shift funds from bank accounts to crypto platforms offering rewards based on activity, banks could see a decrease in lending capital and profits. This poses a competitive threat rather than a consumer protection issue.
Response from President Trump
President Trump has publicly stated his opposition to bankers derailing the bill. A Senate aide described the banking lobby’s letter as “mild,” indicating that committee members are focused on finalizing ethics provisions rather than the yield debate.
Next Steps
The markup vote on May 14 is still scheduled. The White House aims for a July 4 deadline for the President’s signature. However, the last-minute intervention by the banking lobby aims to introduce obstacles that could delay the process beyond the Memorial Day deadline.
If the committee remains steadfast and advances the bill on Thursday, the path to July 4 remains open. But if the lobbying effort succeeds in reopening the yield debate, the entire legislative effort risks collapsing before reaching the Senate floor.