ABA Launches Last-Ditch Effort To Derail Clarity Act Due To Stablecoin Yield Concerns

• ABA is rallying its ranks to oppose what was earlier agreed upon by representatives of the banking and crypto sectors on the Clarity Act’s stablecoin yield provision.

Rob Nichols, President and CEO of the American Bankers Association (ABA), is not letting the current language of the Clarity Act pass for markup without a fight. Despite the Senate Banking Committee already adopting a compromise between representatives of the banking and crypto sectors on stablecoin yields, the trade association urged its members to lobby against the agreement.

ABA Opposes Stablecoin Yield Compromise on the Clarity Act

On Sunday, Nichols sent a letter to ABA’s member banks, urging them to engage with their Senate representatives. He argued that the Clarity Act’s current form, although improved from its earlier version, still poses a danger to their sector.

The ABA boss wanted Congress to “put in place digital asset rules and establish responsible guardrails for the crypto industry.” He said it’s to prevent crypto companies from offering interest-like rewards on payment stablecoins, as its current language still incentivizes the flight of bank deposits into them. The exec believes the bill would still put “economic growth and financial stability at risk.”

Banks and allied trade groups typically cite the Bank of America’s (BOA) report early this year, claiming that allowing yields on stablecoin holdings could cause up to $6 trillion in deposit flight. The matter has led to numerous delays in the Clarity Act’s markup over the past months.

Fast-forward to this week, the Senate Banking Committee has finally scheduled the event for May 14, as parties in the negotiations reached a compromise barring stablecoin yields that are economically or functionally similar to interest payments on bank deposits. On the other hand, they agreed to allow activity-based rewards, such as loyalty points, cashback, and similar features, that don’t run counter to the key prohibitions.

Senator Bernie Moreno Fires Back at ABA

Senator Bernie Moreno (R-OH) criticized Nichol’s brazen call for banks to pressure their representation to “kill stablecoins.” He considered it a desperate call from the banking cartel to restrict average Americans from earning “real yields with their own money.”

Additionally, Moreno highlighted that Nichol’s claim, saying Banking Committee members are not “fully aware” of the supposed stablecoin loophole’s effects on the economy, is “intellectually dishonest and simultaneously demeaning.” He clarified that there’s no loophole in the bill, as lawmakers in the GENIUS Act have already debated the matter exhaustively. The legislator pointed out that such allegations would undermine Congress’s efforts, particularly Senator Bill Hagerty’s (R-TN) work to address the issue.

Moreno also reminded the public that the same banks “worked hand-in-glove with Senator Elizabeth Warren (D-MA) and her allies to debank Americans during the Biden administration. He accused them of applying political pressure on anyone who challenged the regime via schemes like the Operation Choke Point 2.0.

The senator stood firm in his stance that the people must decide what to do with their own money. Likewise, he advocated for real competition so consumers can shop around for the best deals.

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