Banks Throw Shade on Stablecoin Yield Deal: Why the Industry Is Aborted

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Banks Reject Stablecoin Yield Compromise, Demanding Stricter Crypto Limits

As an analyst, I’ve been following the response to the draft Clarity Act, and it’s become clear there’s significant concern among banking groups. Specifically, they feel the draft doesn’t go far enough to prevent stablecoins from earning yield or paying interest. This has created a real split within the banking industry, with some institutions backing the proposal as is, while others strongly oppose it.

Key Takeaways:

  • Rejecting the Digital Asset Market Clarity Act over a rule, banks seek to prevent deposit flights.
  • Eleanor Terrett notes big banks aren’t 100% aligned, so they will next lobby the Senate over market risks.
  • On May 4, the American Bankers Association demanded a fix for a loophole enabling future stablecoin yields.

Banks Still Dissatisfied With Clarity Act Stablecoin Yield Compromise

The saga of the Digital Asset Market Clarity Act continues, as banks and crypto companies have not reached a compromise on stablecoin yields, which banks argue could upset the financial system and affect their business model.

Even after it was reported that Senators Thom Tillis and Angela Alsobrooks had reached an agreement on the language defining stablecoin yields, reports indicate that banks are still not entirely in agreement with it.

According to crypto journalist Eleanor Terrett, a divide is forming among banks, with big banks serving customers still not being fully 100% with the draft as redacted. Other financial institutions, including some community banks, would support the current wording, though.

Terret states that the issue is connected to the narrow language dealing with stablecoin rewards, which “still leaves room for crypto firms to work around the restriction.”

As an analyst, I’ve been following the reaction to this deal, and she voiced strong concerns on social media, stating it doesn’t go far enough. She believes it’s not a real compromise because it doesn’t fully remove yield, only alter its structure. She also indicated that she and others might share these concerns with the full Senate Banking Committee before the formal markup process begins.

In a joint statement issued on May 4, the American Bankers Association, Bank Policy Institute, Consumer Bankers Association, Financial Services Forum, and Independent Community Bankers of America stressed that the proposed language “falls short” of “prohibiting the payment of yield and interest on stablecoins.”

The statement indicates that the language allows rewards to be calculated by reference to duration, balance, and tenure, which could incentivize idle holding of stablecoins for extended periods, negating the ultimate objective of avoiding deposit flight.

“This is a significant loophole that must be addressed,” the banks concluded.

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2026-05-06 07:33