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.

This is not the first time they have asked

The July 13 letter is actually the second formal push from this coalition within roughly two months. On May 8, 2026, the same banking organizations sent a similar request to Senate Banking Committee leaders, arguing that the CLARITY Act needed stronger language before moving forward.

Their concerns landed with at least some members of the committee. On May 14, 2026, the Senate Banking Committee passed the CLARITY Act by a 15-9 vote, and the version that cleared the committee included adjustments to the yield provisions, changes attributed to work by Senators Thom Tillis and Angela Alsobrooks. The banking groups are signaling that those adjustments were a step in the right direction but did not go far enough.

The ABA also brought consumer sentiment into the argument. A Morning Consult survey commissioned by the ABA and conducted in May 2026 showed meaningful consumer support for restricting yield-like features on stablecoins, framing the issue as a matter of protecting local lending rather than protecting incumbent institutions from competition.