Banks fight CLARITY Act over stablecoin yields

TLDR

US banks are resisting the CLARITY Act because it could lock in rules that let stablecoin users earn yield that competes with traditional bank deposits.

1. The CLARITY Act would set broad US crypto rules, and stablecoin yield is the main sticking point between banks and crypto firms.
2. Banks argue high-yield stablecoins could drain hundreds of billions from deposits, while crypto firms see yields as fair competition and better access for users.
3. The bill is stalled in the Senate, and the eventual compromise on yield rules will shape where US stablecoin yields live (regulated platforms vs offshore and DeFi).

Deep Dive

1. What The CLARITY Act Does

The CLARITY Act (Digital Asset Market Clarity Act of 2025) is a US market-structure bill that splits crypto oversight between the SEC and CFTC and sets rules for trading platforms and tokens, including stablecoins, after passing the House in 2025 with a large bipartisan vote but stalling in the Senate Banking Committee amid disputes over stablecoin yields. A separate GENIUS Act, signed in 2025, already created a federal regime for payment stablecoins and banned issuers from paying direct interest, but left a loophole on whether exchanges and wallets can pass through yield. Banks now want CLARITY to close that loophole, while crypto firms and the White House push to preserve some form of yield programs for users, making stablecoin rewards the central battlefield in the bill, not side detail.

2. Why Banks Care About Yields

Banking groups argue that allowing crypto platforms to pay 35 percent rewards on stablecoin balances could cause large deposit outflows from low-yield bank accounts, weakening the funding base for loans and local lending. Research cited in the debate suggests stablecoin adoption could cut US bank deposits by a sizable fraction of stablecoin market capitalization, and stablecoins already manage over one hundred billion dollars in assets, much of it in short-term Treasuries. Bank CEOs like Jamie Dimon say that if a platform holds balances and pays interest, it should meet bank-like capital, liquidity and insurance standards so risks are shared under the same rules. Crypto exchanges respond that yields are just passing through Treasury returns that already exist and that banning them mainly protects bank margins, not consumers.

3. Timeline And What To Watch

The Senate Banking Committee has repeatedly delayed markup of the CLARITY Act as banks reject White House compromise drafts that would allow limited rewards, such as yields tied to payment activity but not on idle balances. The administration and CFTC leadership publicly urge Congress to move quickly, and prediction markets and bank analysts have at times put odds of passage in the next year or so around the 70 percent range, but that hinges on a yield compromise. Key moving pieces to watch are: whether the Senate produces language that explicitly allows or forbids exchanges from offering stablecoin yield; how the OCCs separate stablecoin rules treat bank-issued tokens; and whether election-year politics narrow the window for a deal.

Conclusion

Banks are fighting the CLARITY Act on stablecoin yields because it threatens their deposit franchise while opening a regulated path for crypto platforms to share Treasury-like returns with users. The resolution of this fight will not determine whether stablecoins survive, but it will decide which venues can legally offer attractive yields and how much regulatory risk those yields carry for US crypto users.