As lawmakers push closer to establishing the first comprehensive regulatory framework for digital assets in the United States, tensions between the traditional banking sector and the crypto industry are once again escalating. A new dispute over stablecoin rewards has emerged as one of the final hurdles in negotiations surrounding the proposed CLARITY Act, a landmark bill designed to define how digital assets and stablecoins should operate within the U.S. financial system.
Banking Groups Push for Tighter Stablecoin Restrictions
A coalition of major U.S. banking advocacy organisations, including the American Banking Association and the Consumer Bankers Association, has proposed last-minute amendments aimed at restricting stablecoin issuers from offering any form of customer rewards tied to holding or using stablecoins.
The proposal challenges a recent bipartisan compromise negotiated by Senators Thom Tillis and Angela Alsobrooks. Under the compromise, stablecoin companies would still be prohibited from paying interest similar to traditional bank accounts, but they would be permitted to offer rewards linked to active usage of the digital assets.
Banking groups argue that even limited reward mechanisms could encourage consumers to shift money away from traditional bank deposits and into stablecoin ecosystems. In a joint letter accompanying the proposed revisions, the lobbying groups warned that the current language contains loopholes that could incentivise users to grow stablecoin balances at the expense of the conventional banking system.
Crypto Industry Calls Banking Push “Anti-Competitive”
The crypto industry has strongly pushed back against the proposed restrictions, viewing them as an attempt by traditional financial institutions to suppress competition from blockchain-based financial products.
Paul Grewal, chief legal officer at Coinbase, criticised the banking sector’s proposal publicly, arguing that the restrictions go far beyond preventing stablecoins from functioning as interest-bearing deposit substitutes.
According to Grewal, the proposed language could block a wide range of blockchain-based customer incentives, including transaction rewards and loyalty programmes tied to digital asset usage. He described the banking lobby’s position as an effort to “kill competition” rather than create balanced regulation.
The debate over stablecoin yield has become one of the most contentious issues in ongoing negotiations around U.S. digital asset regulation. Crypto firms have long argued that reward-based utility is central to the adoption and innovation potential of blockchain financial systems.
Senate Momentum Signals Regulatory Shift
Despite months of delays and lobbying battles, the decision by the Senate Banking Committee to schedule a markup session for the legislation next week signals growing momentum behind federal crypto regulation.
The crypto sector had initially hoped to see the legislation pass last year with support from President Donald Trump, but opposition from banking groups slowed progress considerably.
Senators Tillis and Alsobrooks defended their compromise earlier this week, stating that the legislation seeks to strike a balance between financial stability and innovation. The senators also noted that some banking industry stakeholders remain fundamentally opposed to broader crypto competition and regulatory clarity.
The proposed CLARITY Act is widely viewed as one of the most significant digital asset bills currently under discussion in Washington, with potential implications for stablecoin issuers, crypto exchanges, payment companies, and traditional banks alike.
What this means for the industry
- The stablecoin rewards debate highlights growing competition between traditional banks and blockchain-based financial platforms.
- U.S. lawmakers appear increasingly willing to advance comprehensive digital asset regulation despite lobbying pressure.
- Stablecoin regulation could directly influence the future of digital payments, tokenised finance, and blockchain adoption in mainstream banking.
- Banks are concerned that regulated stablecoins may eventually compete with deposits and payment infrastructure.
- Crypto companies see regulatory clarity as essential for institutional adoption and long-term market growth.
