U.S. Banking Associations Warn CLARITY Act Stablecoin Language Creates 'Significant Loophole' for Yields

A coalition of prominent U.S. banking trade associations, including the American Bankers Association and the Bank Policy Institute, issued a joint statement on May 5, 2026, warning that the CLARITY Act's latest stablecoin language still contains a 'significant loophole.' They argue that Section 404 could enable crypto platforms to offer interest or yield-like payouts on customer funds, akin to traditional bank deposits, without adhering to established regulatory frameworks. The groups cautioned that unaddressed, this issue could lead to trillions of dollars in deposit outflows from the U.S. banking system and a substantial reduction in lending. While Senator Thom Tillis indicated the current draft reflects a compromise allowing 'other forms of customer rewards' to facilitate bipartisan passage, the banking associations plan to submit specific amendment proposals. The crypto industry, including Coinbase, is reportedly pressing for a Senate vote on the CLARITY Act next week, following the release of its current text last Friday.