The battle over stablecoin regulation intensified ahead of the U.S. Senate Banking Committee’s planned markup of the Digital Asset Market CLARITY Act, with major banking groups ramping up pressure on lawmakers to tighten restrictions tied to crypto yield products.
Members of the American Bankers Association (ABA) reportedly sent more than 8,000 letters to Senate offices this week, urging lawmakers to revise language in the bill that banks believe could leave room for stablecoin-linked reward programs to continue.
🚨NEW: Since last Friday, @ABABankers members have sent more than 8,000 letters to Senate offices urging lawmakers to fix the stablecoin yield compromise, per a source familiar with the effort. It apparently does not include a separate phone call campaign.
— Eleanor Terrett (@EleanorTerrett) May 12, 2026
Banks push for tougher stablecoin yield language
The lobbying effort centers on a key section of the legislation negotiated by Senators Thom Tillis and Angela Alsobrooks, which currently bars stablecoin issuers and affiliated crypto firms from directly paying interest to users.
Banks are now seeking stricter wording that would prohibit products considered “economically or functionally equivalent” to interest-bearing accounts. The industry argues that without tighter language, crypto firms could continue offering cashback rewards or similar incentives that effectively mimic bank deposits.
The ABA has warned that allowing yield-style incentives on stablecoins could trigger significant deposit outflows from traditional banks, especially smaller community lenders. Banking groups estimate the stablecoin market could expand from roughly $300 billion to as much as $2 trillion if issuers are allowed to offer yield-based products.
Crypto regulation debate heats up ahead of Senate markup
The debate has become one of the most contested issues surrounding the CLARITY Act as lawmakers prepare for committee discussions scheduled for Thursday. Committee members have until the end of business Wednesday to submit amendments to the bill.
According to reports, Senators Jack Reed and Tina Smith also introduced an amendment tied to the banking industry’s proposed changes, potentially forcing lawmakers to choose between supporting banks or crypto companies.
The Senate Banking Committee’s upcoming markup is expected to shape the future of stablecoin regulation in the United States, with lawmakers now balancing pressure from both the banking industry and major crypto firms.
Coinbase and Circle defend crypto rewards programs
The crypto industry is pushing back against efforts to tighten the rules, with major firms including Coinbase and Circle lobbying lawmakers to preserve stablecoin reward programs.
Coinbase CEO Brian Armstrong has reportedly held meetings on Capitol Hill in recent days as the company works to defend the sector’s position during negotiations.
The bill is also facing criticism from Senator Elizabeth Warren, who argued the latest draft lacks sufficient ethics provisions related to crypto activity linked to President Donald Trump’s family.
Meanwhile, retail traders remain divided over the bill’s chances. An ongoing Stocktwits poll showed nearly half of respondents believe the CLARITY Act could eventually pass both chambers of Congress in 2026, while others expect the legislation to stall amid growing political divisions.
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