The American Bankers Association, the Independent Community Bankers of America and 76 state banking associations have called for changes to the stablecoin yield provisions in the Clarity Act, which is awaiting action in the Senate.
In a joint letter sent Monday to Senate Majority Leader John Thune and Minority Leader Charles Schumer, the groups argued that the rules governing payment stablecoins need to be defined more clearly.
The letter focuses on Section 404 of the bill. The provision would prohibit crypto companies from offering direct or indirect interest or yield on payment stablecoins, while still allowing transaction-based rewards. Banking groups believe the distinction is not sufficiently clear in practice.
What does the lack of clarity mean?
The associations argue that the current wording of Section 404 leaves uncertainty over whether it would prevent interest-like programs designed to encourage customers to hold stablecoins for extended periods.
In their view, this could allow stablecoins to function as substitutes for bank deposits, creating particular risks for smaller community banks.
Their reasoning is straightforward. Deposits held at community banks provide funding for mortgages, small-business financing and agricultural loans, all of which support local economies.
The groups said clearly defined limits on interest and yield-like incentives are therefore essential to protecting the flow of credit into these areas.
Their request is explicit: lawmakers should strengthen the yield ban and remove ambiguous language that could permit rewards linked to the size of a stablecoin balance or the length of time it is held.
Opposition continues to grow
The letter marks the latest stage in the banking industry’s long-running opposition to yield-bearing stablecoins.
Meanwhile, the Federal Law Enforcement Officers Association has supported the House version of the bill, while calling for additional provisions to preserve law enforcement powers in anti-money laundering investigations and cases involving decentralized systems.
Another unresolved issue involves ethics rules. It remains unclear whether the final bill will include a provision restricting the president, vice president, members of Congress and other senior federal officials from personally profiting from digital assets while in office.
Senator Elizabeth Warren, one of the most influential Democrats involved in the debate, sent a formal letter to the Senate demanding the inclusion of such a provision. She argued that excluding it would effectively create an opening for the Trump family.
Warren noted that Trump reportedly earned around $1.4 billion from crypto ventures in 2025, more than twice his total income in 2024.
Democratic votes remain critical
A bill generally needs 60 votes in the Senate to overcome a filibuster and advance through a cloture vote.
With Republicans currently holding 53 seats and Democrats holding 47, the bill would need support from at least seven Democratic senators, assuming no Republicans vote against it.
Rising tensions between the Trump administration and Democrats, combined with the lack of visible progress on the ethics provision, could make securing those seven votes increasingly difficult.
Democratic Senators Chris Van Hollen and Chris Murphy are expected to publicly outline their objections at a press conference scheduled for today. Several other Democratic senators, whose names have not yet been disclosed, are also expected to attend.
The bill is currently pending before the Senate and awaiting a floor vote. If it passes, the House would still need to approve the final version before the legislation could be sent to the White House.
