American Bankers Association CEO Rob Nichols sent a letter this week urging bank executives to press lawmakers to revise the CLARITY Act's stablecoin yield language before Thursday's markup. Nichols argued the latest version doesn't go far enough to prevent crypto companies from offering rewards that function like interest on bank deposits, threatening to pull deposits out of the banking system and destabilize the economy.
What the letter says
Nichols told bank CEOs the bill's current prohibition on activity 'economically or functionally equivalent' to paying interest on deposit accounts still has loopholes. The CLARITY Act explicitly bans interest-like payments on payment stablecoins but carves out rewards tied to staking, transaction activity, or liquidity provision. That carve-out, Nichols wrote, leaves room for programs that effectively replicate yield — and could lure depositors away from insured banks.
Banking trade groups, including the ABA, sent a separate letter to senators asking for tighter language. They argued the compromise still allows rewards that act like interest, even if they're branded as loyalty or transaction incentives.
White House mediation stalls
The dispute has already delayed a vote on the legislation for four months. White House crypto advisor Patrick Witt said he asked Nichols and other bank trade CEOs to attend White House meetings to hash out a fix — but they refused. No individual bank representatives showed up at a February meeting either; the sector sent only trade-group staff from the ABA, BPI, and ICBA.
Witt's comment is the first public confirmation that bank lobbyists have been avoiding direct talks while the White House tried to broker a deal.
Senate sources: effort 'pretty milquetoast'
Senate staffers aren't impressed with the banking push. Sources told journalist Eleanor Terret that the trade group's effort was 'pretty milquetoast.' Committee members have already shifted attention to other issues, like ethics language in the bill. But those same sources said the yield question could resurface when the bill hits the Senate floor — meaning the fight isn't over.
The timing isn't great for the ABA. With a markup scheduled for Thursday, any amendment would need to move fast. Nichols' letter may be a last-ditch attempt to rally bank CEOs before lawmakers lock in the current text.
