CLARITY Act: banks push to curb stablecoin yield before key Senate vote

Ahead of a key U.S. Senate Banking Committee vote on the CLARITY Act, the American Bankers Association (ABA) stepped up pressure with 8,000+ letters in under a week. The fight centers on one term: stablecoin yield that looks “deposit-like” for holders. The article frames the issue as pass-through interest. Dollar-pegged stablecoins hold reserves (often cash and short-term U.S. government securities) that earn returns. Banks fear that if stablecoin yield is competitive while users park funds in exchanges, “deposit flight” could drain bank funding and reduce lending capacity. At the center is the Tillis–Alsobrooks compromise. It would limit passive, deposit-like yield on payment stablecoins, while allowing narrower activity-based or transaction-linked rewards under tighter oversight. Crypto groups are generally willing to accept it to move the CLARITY Act forward, but the ABA argues the language still leaves too much room and wants additional tightening. For traders, the CLARITY Act debate is near-term headline risk. Any amendments that further restrict stablecoin yield could affect exchange-linked stablecoin product competitiveness, expectations for capital flows, and overall risk sentiment in crypto finance.