Community banks have revived their fight against stablecoin rewards inside the CLARITY Act, swaying two Republican senators to oppose the bill. The Independent Community Bankers of America warns that letting the rewards stand could push $1.3 trillion in deposits out of the banking system.
Community Banks Reject Any Compromise On Stablecoin Rewards
Community banks are drawing a hard line against the Digital Asset Market Clarity Act, reviving a fight both sides thought was settled. Crypto firms and big banks had agreed on language limiting stablecoin rewards to activity rather than ownership, but community lenders rejected that compromise and have already swayed two Republican senators, Josh Hawley and Jerry Moran, to oppose CLARITY in its current form.
The Independent Community Bankers of America, which groups roughly 5,000 U.S. community banks, has updated its demands for changes to the bill. Rebeca Romero Rainey, the group's president and CEO, told Banking Dive that the rewards issue leaves no room for a middle path: "For us, this loophole has to be closed entirely."
Deposit Flight Is The Core Worry
Romero Rainey said the central concern is deposit flight, estimating that $1.3 trillion could leave the banking system for stablecoins, triggering an $850 billion decline in local lending. She also criticized a White House Council of Economic Advisers report that downplays banks' deposit-flight concerns, arguing it does not account for how much the environment would change if the legislation passed.
Vote Set For September 15
The Senate has convened for a vote on the CLARITY Act on September 15, but it appears unlikely that 60 senators will agree to advance the bill, which would kill it for the foreseeable future. Community bank opposition adds to those existing doubts about the bill's chances.
Source: Bitcoin News
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