U.S. banking groups sent a joint letter to Senate leadership on September 10 (local time), urging stronger regulation on stablecoin interest, returns, and rewards under Section 10404 of the CLARITY Act. According to the letter released by the American Bankers Association (ABA), they stated that the current wording leaves room for indirect payment of rewards for stablecoin holdings. They proposed that not only methods 'economically or functionally equivalent' to bank deposit interest but also 'substantially similar' methods should be prohibited. They also demanded the deletion of provisions allowing rewards to be paid based on stablecoin balances or holding periods. The banking sector argued that if such rewards turn stablecoins into a deposit substitute rather than a payment method, deposits could flow out of local financial institutions, leading to a contraction in loans for small and medium-sized businesses, agriculture, and housing.
