The banking industry is not warming up to stablecoins. On July 13, 2026, the American Bankers Association, the Independent Community Bankers of America, and a coalition of state banking associations sent a joint letter to Senate Majority Leader John Thune and Minority Leader Charles Schumer, pressing them to tighten the yield-related provisions inside the CLARITY Act before the bill advances further.
The core complaint is straightforward: as currently written, Section 404 of the CLARITY Act may leave enough wiggle room for stablecoin issuers to offer returns that look, walk, and talk like interest payments on a bank deposit without technically being classified as such.
The loophole that has bankers nervous
Section 404 was designed to draw a hard line. Its purpose is to prevent payment stablecoins from functioning like interest-bearing deposit accounts, which would give issuers a regulatory arbitrage advantage over traditional banks that operate under strict capital and lending requirements.
The ICBA put a dollar figure on what that gap could cost. Its analysis projects a potential $1.3 trillion decline in bank deposits if stronger yield prohibitions are not locked into law. That figure flows directly into a second number: an estimated $850 billion reduction in community bank lending capacity.
