With a procedural vote in the U.S. Senate approaching, concerns are growing in both the banking sector and the crypto industry over the final version of the Clarity Act. Eight U.S. banking industry groups asked Senate leaders to strengthen limits on stablecoin rewards in the bill.

On Sept. 15, local time, Decrypt and other foreign media reported the groups raised concerns that the recently revised bill leaves an exception that could allow payments to stablecoin holders similar to deposit interest.

In a joint letter to Senate leaders John Thune (John Thune), a Republican senator, and Chuck Schumer (Chuck Schumer), a Democratic senator, the groups said language on rewards should be deleted if they vary based on a customer’s stablecoin balance, holding period or the length of the customer relationship. The letter was signed by eight banking industry groups including the American Bankers Association, the Bank Policy Institute and the Independent Community Bankers of America.

The groups said they agree with the bill’s aim of distinguishing stablecoin rewards from interest, but argued the current text leaves room to circumvent the prohibition. They called for deleting the word "solely" from a provision limiting payments linked to stablecoin holdings. They also asked to change the standard for judging similarity of payment methods from an equivalence standard to a "substantially similar" standard. They said incentives similar in nature to deposit interest should also be subject to regulation.

They also said language should be deleted even for permitted rewards if it allows payouts to vary based on a customer’s balance, holding period or the length of the relationship. The banking industry argued that because interest payments are typically calculated based on factors such as term and balance, that provision could conflict with the earlier prohibition principle.

Banks said they are concerned such stablecoin rewards and incentives could pull money away from bank deposits and weaken funding for loans supplied to mortgage lending and to farms and small and medium-sized businesses. They said regional banks and public-purpose lenders could be more affected. The letter did not present specific evidence that an expected scale of deposit outflows or related lending declines have occurred.

The banking industry also opposed a deposit outflow "circuit breaker" included in the bill. Under the amendment, state treasurers could restrict reward payments if funds move into stablecoins and a substantial outflow of deposits occurs at regional banks. The authority is time-limited and expires 18 months after the law takes effect.

The bank groups said a mechanism that would operate only after substantial deposit outflows have already occurred cannot be an effective safeguard. They argued that rather than responding after deposit flight becomes reality, the bill should block stablecoin rewards and incentives that function like deposit interest at the legislative stage.

The amendment also included a public ethics provision aimed at resolving conflict-of-interest controversy involving U.S. President Donald Trump. Language was added allowing state attorneys general to enforce violations by public officials, and Patrick Witt (Patrick Witt), the White House official in charge of crypto policy, said Trump approved the ethics provision.

But Democratic senators on the Senate Banking Committee and Democratic Senator Elizabeth Warren (Elizabeth Warren) have raised the issue that state attorneys general cannot in practice indict public officials, including the president. They said that while an ethics provision was added, its actual scope of enforcement is limited.

The crypto industry also expressed dissatisfaction with the amendment. A provision in the bill on regulatory clarity for blockchain that protects related developers who do not directly handle customer funds omitted protection from prosecution under federal criminal law. Coin Center’s Jason Somensatt (Jason Somensatt) said it was positive that regulatory protections were codified, but expressed disappointment that criminal-law protections were excluded.

Still, across the industry there are signs that disappointment over reduced developer protections is not enough to derail the bill as a whole. The industry says dissatisfaction with the provision is being voiced broadly, but it is not leading to a movement to oppose the entire bill for that reason.

Policy circles are placing weight on the bill’s chances of passage. Witt described the amendment as the "best and final offer" and said he had a very good feeling about the first vote. He added that whether 60 votes can be secured is a matter of political judgment rather than policy.

The Senate is scheduled to hold a procedural vote on Sept. 16 to advance the bill. It needs 60 votes to move to the next stage. With banks calling for tighter regulation of stablecoin rewards and the crypto industry pushing back over reduced developer protections, attention is on whether bipartisan support for the amendment will translate into votes.