Banking Industry Says Clarity Act Stablecoin Proposal Could Help ‘Escape’

A coalition of the nation’s banking trade groups, representing Wall Street giants and community banks alike, released a statement Friday expressing concern that the new language in the major crypto bill will benefit digital asset companies and disrupt banking culture.

For months, the banking industry and crypto networks have been fighting over key language in the Clarity Act, a bill that would allow more crypto services to be legalized in the United States.

Banks want to add language to the law prohibiting crypto companies from paying dividends on stablecoins, cryptocurrencies that are pegged to the value of the US dollar. Banks say such programs would make traditional, low-cost accounts less attractive; crypto companies, including Coinbase, said that they must compete with traditional currencies.

For about four months, a struggle on stablecoin yields has prevented the Clarity Act from moving forward in the Senate. Last week, two lawmakers on the Senate Banking Committee finally unveiled their proposal compromise on this issue, which crypto leaders quickly received.

Senators soon expressed hope that the crisis had been resolved, and that a committee vote on the Clarity Act was imminent.

But now, a joint group of high-level business groups of banks are also asking for changes in the proposed language, arguing that the current policy contains waste that would allow crypto companies to avoid restrictions imposed on stablecoin yields.

The compromise language, authored by Senators Thom Tillis (R-NC) and Angela Alsobrooks (D-MD), would prohibit the payment of rewards on stablecoins in a way that “economically or functionally equates to a return of interest or yield on an interest-bearing deposit.”

But it can also be green rewards linked to participation in management, verification, and accounting – and rewards calculated based on the user’s account balance.

Today, six banking trade groups, representing all major national banks and community banks in all 50 states, wrote a letter. letter to the Senate Banking Committee argues that the exemption is excessive.

“We are concerned … that the language they are looking for includes exceptions that would help evade their demands and prevent customers from holding and growing stablecoins by spending money,” the groups said.

The letter includes specific questions about the revision of the language of the stablecoin yield-including hitting the ability of rewards to account bars in any way, and changes to ban payments “in the same economy or services” to pay, to ban payments “very similar” to pay.

The letter lists several potential programs for the stablecoin reward that banking groups say could exist under language that would undermine the spirit of compromise. These include payments made like the mutual fund market, monthly payments that increase with the amount of the account, and payments based on the account but which are triggered by making a monthly amount.

As banks began to worry about the new language earlier this week, Sen. Tillis he answered in the words that he and Sen. Alsobrooks “respectfully agreed to disagree”—indicating that lawmakers were willing to proceed with a committee vote on the bill regardless.

Decrypt he reached the two parliamentarians about the increasing problems that have been released today by the commercial banks, but he did not receive an immediate response.

Time is of the essence for supporters of the Clarity Act, which senators on the Banking Committee have promised will be considered next week or the week after.

The Senate is only in session for two weeks this month, and will soon adjourn before the mid-November election. Sen. Bernie Moreno (R-OH), pro-crypto member of the Senate Banking Committee, recently he encouraged that if the bill doesn’t pass this month, “digital content laws won’t pass in the foreseeable future.”