Banks Call Senators Directly to Oppose Stablecoin Yield in CLARITY Act

The CLARITY Act aims to create a federal framework for stablecoins, including rules on whether issuers can pay interest on holdings. Banks argue that allowing yield would give stablecoins an unfair edge over traditional deposits, potentially pulling funds away from the banking system.

- The North Carolina Bankers Association told its members on April 18 to phone Senator Thom Tillis’s office directly to demand changes to the stablecoin yield provision. - Banks estimate that permitting yield could trigger as much as $6.6 trillion to leave U.S. bank deposits, a figure based on the current $17.2 trillion of domestic deposits reported by the Federal Reserve in Q1 2025. - The combined market cap of the two largest stablecoins, USDT and USDC, rose about 12% year‑over‑year to roughly $115 billion in April 2025, according to CoinGecko. - A White House Council of Economic Advisers analysis found that banning yield would increase bank lending by only $2.1 billion (about 0.02% of total U.S. loans) and impose an $800 million net welfare cost on consumers.

If the yield ban stays, stablecoin issuers may need to adjust business models, potentially reducing appeal to yield‑seeking investors. Banks hope the change protects their deposit base, which underpins lending activity. The Senate Banking Committee’s markup, delayed from April to at least May, will test whether the compromise can hold. Any amendment could affect the bill’s path to a floor vote before the Memorial Day recess.