Investors tracking crypto regulation learned on 13 July 2026 that 78 US banking groups have written to Senate leaders urging tighter rules on CLARITY Act stablecoin rewards, arguing that the bill’s current wording allows payment stablecoins to behave too much like bank deposit accounts.
The letter, addressed to Senate Majority Leader John Thune and Minority Leader Charles Schumer and also shared with the Senate Banking Committee, was led by the American Bankers Association. The coalition focused its proposals on Section 404 of the bill, which sets the rules for how stablecoin issuers may reward users.
The Yield Loophole Banks Want Closed
The bill’s current draft bans returns paid solely for holding a stablecoin. The banking coalition argues that single word creates a gap: issuers could combine holding-based rewards with activity-based incentives and remain technically compliant while delivering the same economic result as a deposit rate.
The groups want ‘solely’ removed entirely. They also propose replacing the current ‘economically or functionally equivalent’ test with a stricter ‘substantially similar’ standard, which would cast a wider net over structures designed to mimic deposit yields without meeting that label.
The Section 404 language the groups are targeting was itself a compromise. Crypto Briefing reports that Senators Thom Tillis and Angela Alsobrooks developed the revised yield provisions as a middle ground, though the banking industry clearly regards it as insufficient.
An earlier related letter pressing for technical refinements to Section 404 included the Bank Policy Institute, Consumer Bankers Association, Financial Services Forum and National Bankers Association, according to the ABA Banking Journal. That May 2026 letter was a separate action from the 13 July coalition letter, though many of the same organisations are behind both.
What the CLARITY Act Stablecoin Rewards Row Means for Your Money
The banking groups’ central concern is deposit flight (money moving out of bank accounts into rival products). Their letter warns that poorly drafted yield rules could drain $1.3 trillion from bank deposits, gutting the funding that community banks use for mortgages, small-business loans and agricultural credit.
‘We remain concerned that ambiguities within the bill could encourage stablecoin arrangements to effectively function as substitutes for deposits,’ the groups wrote.
For UK ISA or SIPP holders with exposure to US bank stocks or financial-sector funds, the concern is straightforward: if stablecoin rewards erode deposit bases, net interest margins (the gap between what banks pay savers and charge borrowers, which drives much of their profit) come under pressure.
If the amendments are adopted, regulated issuers such as Circle or Paxos would find it harder to offer yield-like rewards that compete with offshore crypto platforms. Revenue would instead flow from payments processing, transfers, integrations and reserve management rather than user-facing returns.
The bill itself has moved quickly by Washington standards. The CLARITY Act (H.R. 3633) cleared the House in July 2025 with 78 Democrats joining the majority, according to KuCoin News. The Senate Banking Committee then advanced it 15-9 on 14 May 2026, and the bill was placed on the Senate Legislative Calendar on 1 June 2026, per CryptoRank. The Senate text that emerged from that process ran to 309 pages, up from a 278-page January 2026 draft, reflecting how much negotiating has gone into the bill, according to Galaxy Research.
A 17 July hearing had been scheduled to advance the process further, though it is a House Financial Services Committee field hearing in New York rather than a Senate session, as some reports initially described it.
On the question of whether the bill actually passes, sources conflict. Galaxy Research puts the odds at 60–75% for 2026 enactment, with a possible presidential signature around early August. Prediction market odds tracked by crypto.news tell a different story: they had slipped to roughly 43% by mid-July 2026, weighed down by the bill’s 60-vote Senate threshold, reconciliation risks and the narrowing window before the August recess.
For investors, the stablecoin rewards debate is one thread inside a much larger piece of legislation that also covers market structure and regulatory jurisdiction. The CLARITY Act would give the Commodity Futures Trading Commission exclusive authority over spot digital commodities such as Bitcoin, while the Securities and Exchange Commission retains oversight of investment-contract tokens. How the rewards rules land will shape whether payment stablecoins become a genuine substitute for bank deposits or remain primarily settlement and payment infrastructure.
The 60-vote Senate threshold is the number to watch: the bill cannot advance without meaningful bipartisan support, and the banking lobby’s amendments are, at their core, an attempt to secure that support by removing a feature that makes stablecoins look like deposits in all but name.
