Community Banks Step Up Lobbying Against CLARITY Act Over Stablecoin Rewards

Community banks are intensifying their push against the Digital Asset Market Clarity Act (CLARITY Act), warning Senate Republicans that provisions allowing stablecoin rewards could siphon deposits from local lenders and weaken their ability to extend credit. According to Punchbowl News, weeks of outreach from smaller, locally owned banks have sharpened concern among GOP senators, many of whom have long-standing relationships with community bank executives. Senator Mike Rounds said those ties have made the message resonate: "They know us. Each of us knows those people personally." Brad Bolton, CEO of Community Spirit Bank, said direct input from smaller institutions has been critical in reframing the debate. "You needed unknown community bankers like me, out in the middle of nowhere, telling the senator, this is the real effect of it," he said. The bill's current draft removed rewards for holding stablecoins after extended talks and a compromise between banks and the crypto industry. It still permits rewards tied to use, a structure that would encourage stablecoins as a payment tool. Senators Josh Hawley and Jerry Moran have said they will oppose the CLARITY Act unless the text is changed to address the stablecoin reward issue, a stance that threatens a key block of Republican support. The stablecoin dispute comes on top of another major unresolved hurdle: an ethics provision that remains under negotiation with the White House. Senate Majority Leader John Thune has filed for a September vote, but with intra-party resistance and broader partisan divisions, prospects for passage have weakened sharply.