Six major US banking trade groups are pressing for stricter language on stablecoin yield restrictions in the CLARITY Act ahead of a Senate Committee markup scheduled for May 14, 2026. The American Banking Association, Bank Policy Institute, Consumer Bankers Association, Financial Services Forum, Independent Community Bankers of America, and National Bankers Association jointly submitted proposed amendments on May 8 targeting Section 404(c)(1) of the bill. Their core argument: current language defining passive yield mechanisms leaves regulatory gaps that could allow yield-like rewards to compete directly with traditional bank savings products.
Banks Target Loopholes in Yield Definition
The CLARITY Act’s stablecoin framework permits rewards tied to genuine user activities—staking, transaction fees, liquidity provision—while banning passive, deposit-like interest that mirrors savings accounts. Banking groups contend the bill’s use of “functional and economic equivalent” to define prohibited yield mechanisms is insufficiently precise. They propose replacing this language with “substantially similar,” arguing the current standard allows issuers to engineer rewards that functionally operate like deposits but technically escape the ban. The revision targets Subsection (3)(B) for complete omission, signaling banking groups view specific provisions as fundamentally unworkable under current wording.
Senate Markup Looms Amid Competing Priorities
The Senate Committee on Banking, Housing, and Urban Affairs will consider amendments during its scheduled May 14 markup at 10:30 AM EST. However, a Senate aide dismissed banking groups’ revision efforts as “pretty milquetoast,” suggesting lawmakers have already shifted focus to other CLARITY Act provisions. This characterization indicates the committee may not prioritize the banking industry’s proposed tightening during markup. The crypto market, currently valued at $2.65 trillion, faces regulatory uncertainty as the Senate weighs competing interests between traditional finance and digital asset innovation.
Stablecoin Regulation Enters Final Legislative Phase
The CLARITY Act represents months of negotiation among legislators, the crypto industry, and US banks—a rare alignment of stakeholders on digital asset rules. Stablecoin yield restrictions are central to the compromise, designed to prevent destabilization of the traditional banking system. The banking groups’ last-minute amendment push reflects ongoing tension over how strictly these restrictions should apply. No official response from crypto industry participants or Senate leadership has been reported. The outcome of the May 14 markup will clarify whether banking groups secure their preferred language or whether the current compromise language advances unchanged.
What Happens Next
The May 14 markup serves as the immediate test of banking groups’ amendment leverage. If the committee votes down their proposals, the bill moves forward with existing yield language. If approved, revised definitions could significantly narrow what stablecoin issuers can offer users without triggering deposit-like activity classifications. Either outcome will shape how aggressively the final CLARITY Act constrains stablecoin competition with traditional savings products.
