Community Bankers Demand Total Ban on Stablecoin Rewards

Key Takeaways

• Community banks revived stablecoin reward concerns, swaying two Republican senators to oppose CLARITY.
• ICBA warned stablecoins could trigger a $1.3T deposit flight, cutting local bank lending by $850B.
• Growing opposition leaves CLARITY short of 60 Senate votes, threatening to kill the bill on Sept 15.

Community Banks Draw Close Ranks On Stablecoin Yield

Passing the Digital Asset Market Clarity Act has become a difficult task, as issues believed to be solved rise again.

While both parties, the crypto industry and big banking, had reached a compromise on the language to confine stablecoin rewards to activity rather than ownership, this key pain point has been revived by community banks, which have already swayed at least two Republican senators, Josh Hawley and Jerry Moran, to oppose CLARITY in its current form.

Independent Community Bankers of America (ICBA), a membership organization that groups roughly 5,000 community banks in the U.S., has recently updated its demands for changes to the CLARITY Act and highlighted how a wrong decision could affect the future of these institutions and the groups that receive credit through their intermediation.

In an interview with Banking Dive, Rebeca Romero Rainey, president and CEO of ICBA, declared that the discussion around these rewards should not revolve around compromise, as the future of the community banking sector might be at stake.