- Banking groups warn CLARITY Act loopholes may allow stablecoin rewards that resemble traditional bank deposits.
- Senators aim to finalize crypto legislation before Memorial Day as stablecoin yield disputes intensify in Congress.
- The CLARITY Act expands crypto regulation through SEC, CFTC, DeFi, banking, and bankruptcy oversight provisions.
U.S. banking groups are pressing lawmakers for last-minute changes to stablecoin provisions before the Senate Banking Committee reviews the CLARITY Act on May 14, 2026. According to Bloomberg, organizations including the American Bankers Association submitted a joint letter demanding stricter language around stablecoin rewards. The push comes as senators race to finalize crypto legislation before the Memorial Day recess.
Banking Lobby Targets Stablecoin Rewards
The dispute centers on a compromise reached May 1 by Senators Thom Tillis and Angela Alsobrooks. Under the proposal, issuers cannot pay passive interest on stablecoins. However, companies may still offer rewards tied to platform activity or transaction usage.
Banking groups argued the wording leaves room for issuers to mimic deposit-like products. In their May 8 letter, the organizations warned the exceptions could encourage users to move money away from banks.
The coalition included the American Bankers Association, the Bank Policy Institute, and the Independent Community Bankers of America. Additionally, the Consumer Bankers Association reportedly supported stricter restrictions on stablecoin incentives.
Meanwhile, Senate Banking Committee Chairman Tim Scott continues pushing toward the scheduled markup hearing. Lawmakers are attempting to complete negotiations before Congress begins its Memorial Day recess on May 21.
CLARITY Act Expands Beyond Stablecoins
The Senate version of the CLARITY Act now spans nine sections covering broader digital asset regulation. The legislation outlines oversight roles for both the SEC and CFTC while also addressing decentralized finance and bankruptcy protections.
Notably, the bill includes provisions tied to banking activity involving digital assets and anti-illicit finance rules. The House previously passed its version in July 2025 with bipartisan support.
The White House is reportedly targeting July 4, 2026, for final approval of crypto legislation. However, lawmakers still need to reconcile Senate and House versions before a final vote.
Senate Negotiations
Stablecoin rewards have become one of the most contested sections of the legislation. Crypto companies previously supported the compromise because it allowed activity-based incentives instead of outright restrictions.
However, banking organizations continue pushing for tighter definitions before the committee vote. According to the latest draft, the legislation bans rewards on idle balances while allowing other promotional programs.
Coinbase executives Faryar Shirzad and Paul Grewal publicly welcomed recent progress on the legislation. Still, negotiations over stablecoin language remain active ahead of Thursday’s Senate markup hearing.
