Clarity Act Stablecoin Yield Clause Faces Banking Pushback

## The CLARITY Act compromise meets a banking wall  On May 8, 2026, [Decrypt](https://decrypt.co/367351/banking-industry-clarity-act-stablecoin-evasion) reported that six of the country's biggest banking trade groups asked Senate Banking Committee lawmakers to tighten the stablecoin language in the CLARITY Act. Their concern is specific: the draft would bar rewards that are "economically or functionally equivalent" to interest on a bank deposit, yet still leave room for rewards tied to governance, validation, staking, or even a user balance. The bill itself is the Digital Asset Market Clarity Act of 2025, and the text is posted on [Congress.gov](https://www.congress.gov/bill/119th-congress/house-bill/3633/text/ih). That matters because the debate is no longer about whether stablecoins should exist. It is about how much of a payment token's reward design can survive before it starts to look like a deposit product in everything but name. ## What the banks want to narrow The trade groups are not asking for a blanket ban on stablecoin rewards. They are asking for a narrower drafting line. In Decrypt's account, they want to remove the ability for rewards to reference account balances at all and replace "economically or functionally equivalent" with the tighter phrase "substantially similar." That is not a cosmetic change. It changes the product room available to issuers. If the carve-outs stay broad, a stablecoin platform could still structure a payment that is not labeled as interest but behaves like interest. The examples the banks flagged make that point clearly: a program that looks like a money market fund, a flat monthly reward that rises as balances rise, or a balance-based payout triggered by hitting a transaction threshold. The common thread is not the label. It is the function. The banking groups are trying to stop that function from slipping back into the market through a different doorway. ## Why the dispute is bigger than wording This is where the policy question gets harder. Banks see balance-linked rewards as deposit substitution. Crypto firms see them as part of a competitive payments stack. Congress has to decide whether the rule is meant to preserve bank-style prudence, or whether it is meant to leave stablecoin issuers enough room to compete for user balances without crossing a deposit line.  If lawmakers choose the wrong balance, they get one of two bad outcomes. - The language is so tight that stablecoin rewards become too small to matter, which weakens the commercial case for the product. - The language is too loose, which leaves a durable loophole for "not interest, but effectively the same thing." That is why this dispute is more useful to read as a boundary-setting exercise than as a simple bank-versus-crypto fight. The real question is not whether one side wins the marketing argument. It is whether the final rule can survive product design. ## The Senate clock is the other constraint The legislative clock matters almost as much as the wording. Decrypt said supporters expect the CLARITY Act to come up next week or the week after, but the Senate is only in session for two weeks this month before the midterm calendar starts to crowd out floor time. Sen. Bernie Moreno's warning is the blunt version of that pressure: if the bill slips now, broader digital-asset legislation may not move for a long time.  That makes the next markup more important than the rhetoric around it. If the compromise is going to hold, lawmakers need language that can survive both committee scrutiny and another round of industry pushback. If they cannot narrow the carve-outs, the fight will likely move from the bill text to the way stablecoin issuers design rewards after passage. ## What to watch next - Whether the next draft removes any reference to account balances. - Whether lawmakers keep the "economically or functionally equivalent" test or replace it with "substantially similar." - Whether the committee can move before the Senate's short session window closes. Those three signals will tell us whether the CLARITY Act is moving toward a durable rule or only a temporary truce. --- Author: [Alex Chen](https://x.com/AlexC0in) Source: [decrypt.co](https://decrypt.co/367351/banking-industry-clarity-act-stablecoin-evasion)