Bank Trade Groups Say Senate Stablecoin Reward Fix “Falls Short” Amid Deposit Protection Concerns
Major U.S. banking trade groups have criticized the latest Senate compromise on stablecoin rewards, calling it insufficient to protect traditional bank deposits.
Key Objection from Banking Industry
On May 4, 2026, five leading banking organizations American Bankers Association, Bank Policy Institute, Consumer Bankers Association, Financial Services Forum, and Independent Community Bankers of America issued a joint statement. They acknowledged the intent of the proposal but said it “falls short” of its goal.
The compromise, finalized by Senators Thom Tillis (R-NC) and Angela Alsobrooks (D-MD), aims to block stablecoin issuers and platforms from paying interest or yield on holdings that resemble bank deposits. However, it still permits activity-based or transaction-based rewards.
Banks’ Main Concerns
Banking groups argue the current language leaves loopholes that could encourage deposit flight from traditional banks, especially community banks. They specifically flagged issues with:
Rewards tied to membership organizationsIncentives calculated based on balance size, duration, or tenureStructures that effectively reward idle holding of stablecoins
Such incentives, they say, could pull customer funds away from banks that support local lending and economic activity.
Background of the Dispute
The stablecoin reward issue has delayed broader crypto market structure legislation for months. The House passed the Clarity bill last year, but Senate progress has been slow due to disagreements between banks, the White House, and the crypto industry.
Crypto firms argue that restricting rewards would hurt innovation. Banks counter that unregulated yield-like products threaten the deposit base.
Coinbase had previously withdrawn support over earlier language but has now approved the latest version.
