Banks Push Senators to Limit Stablecoin Yield Ahead of Vote
James Ding May 11, 2026 18:24
The ABA urges banks to lobby senators against stablecoin yield provisions before the May 14 Senate vote on the CLARITY Act.
The American Bankers Association (ABA) is ramping up its lobbying efforts ahead of a critical Senate Banking Committee vote scheduled for May 14. At the center of the debate is the CLARITY Act, a proposed regulatory framework for digital assets, with specific focus on provisions allowing stablecoin issuers to offer yield-like rewards.
In a memo sent to member bank CEOs over the weekend, ABA President Rob Nichols described the issue as an “urgent advocacy fight.” Nichols warned that the legislation, as currently drafted, could encourage consumers to divert deposits from traditional banks to stablecoin products. “The legislation would permit stablecoin issuers and their partners to pay interest or interest-like incentives to stablecoin holders,” Nichols wrote, calling this a potential “digital asset loophole” that undermines financial stability.
The ABA letter follows months of behind-the-scenes lobbying. On May 8, the association, along with other banking groups, sent a letter to Senate lawmakers urging stronger restrictions on stablecoin yield provisions. Bank of America CEO Brian Moynihan has gone as far as to estimate that such products could siphon off up to $6 trillion from traditional banks.
Crypto Industry Pushback
The crypto industry has pushed back against these criticisms, arguing that stablecoin yield products provide much-needed innovation in a financial system that offers negligible interest rates to consumers. Coinbase CEO Brian Armstrong has been vocal in criticizing banks for opposing yield-bearing stablecoins while offering near-zero returns on traditional deposits.
Lawmakers attempted to strike a middle ground earlier this month by revising the bill’s provisions. The updated language prohibits crypto companies from offering yield solely for holding payment stablecoins but allows rewards tied to “bona fide activities.” However, the ABA and other banking groups argue that these compromises still fall short of protecting the traditional banking sector.
High Stakes for the CLARITY Act
The stakes are high for the CLARITY Act, which has become a litmus test for broader crypto regulation in the U.S. A HarrisX survey of 2,008 registered voters found 52% support for the bill, with 47% indicating they’d cross party lines to support candidates who back it. Prediction market platform Polymarket currently puts the odds of the bill becoming law by the end of 2026 at 65%, up from 46% just weeks ago.
As the Senate Banking Committee prepares for Thursday’s markup, both the banking and crypto industries will likely intensify their lobbying efforts. The outcome could have significant implications not just for stablecoins but for the balance of power between traditional finance and decentralized digital assets.
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