Key points

  • Eight banking associations sent Senate leaders a September 14 letter seeking stronger restrictions on interest-like stablecoin rewards.
  • The groups say a proposed circuit breaker would respond only after damage to community-bank deposits had occurred.
  • The requests are proposed amendments, not enacted rules; the Senate debate and the evidence on deposit migration remain contested.

Eight U.S. banking associations asked Senate leaders on September 14 to strengthen restrictions on stablecoin rewards in the CLARITY Act, opening another front in negotiations over the digital-asset legislation. Their joint letter argues that a proposed safeguard against deposit losses would react too late to protect banks and the borrowers they finance.

The request went to Majority Leader John Thune and Democratic Leader Charles Schumer. Signatories include the American Bankers Association, Bank Policy Institute and Independent Community Bankers of America. The associations support a lasting framework for digital assets but want lawmakers to narrow the circumstances in which crypto businesses can offer payments resembling bank interest.

Related reporting: U.S. Senate crypto bill faces pivotal procedural test

The dispute is over how rewards work

The coalition distinguishes rewards earned through transactions from payments for holding a balance. It supports that distinction in principle, while arguing the draft leaves ways around it. Its suggested changes include a broader test for interest-like incentives and removal of a provision allowing rewards to be calculated using balance size, holding duration or customer tenure.

For exchanges and wallet providers, that distinction could shape how customer reward programs are designed. For customers, the eventual wording could determine which incentives remain available. Neither the joint letter nor the recommendations themselves changes existing account terms or creates a new restriction: lawmakers would first have to adopt the requested language.

A temporary safeguard draws criticism

In a separate September 14 letter, ICBA described the proposed circuit breaker as operating during the first 18 months after enactment. According to its account, Treasury would consult federal banking regulators if transfers to payment stablecoins substantially damaged deposits at community banks with less than $10 billion in assets. That finding would require regulations limiting interest-like payments.

ICBA objects both to waiting for losses and to the remedy. It argues that the resulting regulations could reproduce limitations it already considers inadequate. Its letter asks senators to clarify the boundary between stablecoins used for payments and products used to store value, rather than relying on a later regulatory response to repair the distinction.

Deposits and competition remain contested

The community-bank group links the issue to mortgage lending, agricultural credit and small-business financing. Its concern is that money transferred from local deposits into stablecoins could reduce the funding available for those activities. This is the banking industry's risk argument, not evidence in the letters that the proposed rules have already caused such an outflow.

CoinDesk independently reported the coalition's request and the opposing position. It said crypto advocates dispute the case that stablecoin rewards cause deposit flight and argue that lawmakers have already addressed the concern. The publication also reported that Treasury Secretary Scott Bessent defended the additional authority as a way to protect community banks while supporting digital-asset technology.

The immediate issue is therefore legislative design, not a newly imposed ban on stablecoin rewards. The Senate vote expected on September 15 remains a step in the bill's uncertain path. Banks, crypto platforms and their customers will need to distinguish amendments requested by interested groups from language actually adopted, and any future implementation from the terms being debated now.

Sources

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