ICBA, state groups urge stronger Clarity Act stablecoin yield prohibition

ICBA and 44 affiliated state banking associations called on senators to amend the Clarity Act digital assets market structure bill before it is considered on the Senate floor.

Call for Stablecoin Yield Prohibition: In a joint letter to lawmakers, the groups reiterated their longstanding call for H.R. 3633 to include a robust and effective prohibition on payment of interest, yield, or rewards to holders of stablecoins.

Section 404 Updates: Citing ICBA’s economic data analysis that shows failing to extend the yield prohibition could reduce community bank lending by $850 billion due to a $1.3 trillion reduction in the industry’s deposits, the groups provided detailed updates to Section 404 of the legislation to strengthen its narrow prohibition on payment of stablecoin yield.

Background: The Senate Banking Committee voted 15-9 to advance the bill last month with updated legislative language that bars stablecoin yield that is “economically or functionally equivalent” to interest on bank deposits. ICBA has repeatedly told lawmakers that while the language is an improvement over the original bill offered in January and reflects community bank advocacy, it falls short of a robust yield prohibition.