Stablecoin rewards fight heats up before May 14 CLARITY Act markup

Ahead of the U.S. Senate Banking Committee markup on May 14, the American Bankers Association and other bank trade groups are pushing to tighten stablecoin rewards rules under the Digital Asset Market CLARITY Act of 2025. ABA head Rob Nichols urged bank executives to contact senators, arguing that allowing “interest-like rewards” on stablecoins could trigger “deposit flight” from banks to crypto and harm financial stability. The Senate bill aims to create a federal framework with SEC/CFTC split oversight. A May 2 compromise would bar “covered parties” from paying yield-like returns for simply holding stablecoins, while permitting rewards tied to real user activity or transactions. However, banks want technical edits, warning the language could still be evaded (for example, fixed monthly payments scaled to account balances). Market context remains constructive: crypto investment products logged $857.9M in weekly inflows for the sixth straight week, Bitcoin pushed above $80,000, and total AUM reached $160B, led by U.S. inflows. Traders should watch whether the stablecoin rewards provisions pass as-is or get narrowed further, since this could quickly shift risk appetite and stablecoin-related liquidity flows. Key takeaway for traders: stablecoin rewards language is a near-term policy catalyst—monitor the May 14 outcome for potential volatility around BTC sentiment and flows.