134 U.S. Bank Executives Urge Senate to Ban Stablecoin Yield Incentives in CLARITY Act

Coalition warns yield-bearing stablecoins threaten deposit bases, urging strict bans on interest and rewards to preserve traditional lending stability.

Woofun AI reports that 134 U.S. banking association officials and executives have formally petitioned the Senate to amend stablecoin provisions in the CLARITY Act. The coalition demands stricter prohibitions on interest and yield payments, including indirect mechanisms like rewards programs, arguing that such incentives could divert hundreds of billions of dollars from traditional bank deposits. They assert that payment stablecoins must function solely as a medium of exchange rather than yield-bearing instruments competing with insured deposits. The letter warns that blurring the line between transactional tools and savings products risks destabilizing the financial system by weakening the deposit base that funds local lending. Consequently, the group urges lawmakers to close loopholes allowing issuers to circumvent restrictions through creative reward structures.