The American Bankers Association is raising alarms over the CLARITY Act — the marquee stablecoin bill moving through Congress. In an urgent letter sent to bank CEOs on May 10, ABA President and CEO Rob Nichols warned that the current version of the legislation does not adequately prevent crypto companies from offering interest-like rewards on payment stablecoins. The letter effectively puts banks on notice that the bill, as written, could let nonbank stablecoin issuers compete head-to-head with traditional deposit accounts.
What the letter says
Nichols' letter is direct. He tells bank leaders that the CLARITY Act's existing guardrails are too loose. The concern centers on stablecoins that function like cash but also pay yields — a feature regulators have long tried to keep out of payment tokens. The ABA argues that without tighter restrictions, crypto firms will exploit the loophole to offer what amounts to interest-bearing accounts, sidestepping banking regulations that apply to similar products at traditional banks.
Why the timing matters
The letter arrives as the CLARITY Act heads toward a floor vote in the Senate. Stablecoin legislation has been a top priority for lawmakers this session, with both parties signaling support for a federal framework. Banks have largely backed the effort, hoping it would bring clarity and keep crypto issuers on a level playing field. Nichols' warning suggests that the industry's biggest trade group thinks the current text doesn't deliver on that promise.
The sticking point
The core dispute is over what counts as a reward. The ABA says the bill's definition of interest is too narrow, allowing crypto firms to structure payments as "incentives" or "loyalty points" that function identically to interest but fall outside the ban. The letter urges lawmakers to close that gap before the bill passes. Whether the Senate will amend the language — or move forward as is — remains the open question.
What happens now
The ABA isn't asking banks to oppose the bill outright. It's pushing for changes. Nichols' letter signals that the group will lobby for a stricter definition of prohibited rewards in the coming days. With the vote potentially weeks away, the stablecoin fight just got a lot more specific.
