The American Bankers Association is asking banks to push back against a provision in the Digital Asset Market Clarity Act that it calls a loophole allowing stablecoin issuers to pay yields. The group’s warning comes ahead of a Senate markup of the legislation, signaling a fight over how far the bill should go in accommodating crypto-based interest payments.
The Loophole at Issue
The provision in question would let stablecoin projects offer yields to holders—something traditional banks are largely barred from doing on demand deposits. The ABA argues this creates an uneven playing field. In a memo to member banks, the trade group described the language as a loophole that could undercut existing banking regulations. It did not provide a detailed legal analysis of the specific clause, but the message was clear: banks should contact their senators to oppose the measure.
A Senate Markup Looms
The Digital Asset Market Clarity Act has been winding through Congress for months. The upcoming markup in the Senate Banking Committee is the next major milestone. Committee leadership has not yet released a date, but the ABA’s early opposition suggests the stablecoin yield question could be a flashpoint when the bill is debated line by line. The group represents more than 4,000 banks, giving it significant lobbying weight.
What’s at Stake for Banks
For traditional lenders, the concern is straightforward. If stablecoin issuers can legally offer returns on what are essentially prepaid digital dollars, banks worry they’ll lose low-cost deposits. Customers might shift money into yield-bearing stablecoins, eating into banks’ funding base. The ABA’s position is that if stablecoins are to function like money, they should follow the same rules as bank deposits—including the ban on interest for demand accounts.
Stablecoin advocates counter that the technology is new and should be allowed to experiment. They argue yields are a feature, not a bug, and that the bill’s current language simply clarifies that stablecoins are not securities. The ABA sees it differently.
The bill’s sponsors have not yet signaled whether they are open to amending the yield provision. With the markup approaching, the lobbying battle is likely to intensify. Banks are being asked to weigh in now, before the committee votes.
