Banking trade groups criticize Clarity Act for stablecoin loopholes
Banking trade groups argue the CLARITY Act's Section 404 creates stablecoin loopholes that threaten traditional bank deposits and lending capacity.Summary
Major banking organizations, including the American Bankers Association and the Bank Policy Institute, are opposing Section 404 of the CLARITY Act. They contend that this provision allows stablecoin issuers to offer yield-like rewards, which could incentivize a massive outflow of deposits from traditional banking institutions. The banking lobby warns that such a shift could reduce lending to consumers and small businesses by over 20%. While larger Wall Street firms generally support the Act for its regulatory clarity regarding crypto operations, community and regional banks remain concerned about the competitive threat. The debate highlights a significant legislative battle over whether stablecoin rewards should be classified as interest, a distinction that will ultimately determine regulatory jurisdiction and the future utility of stablecoins in the U.S.
(Source：Crypto Briefing)