Five of the most powerful banking groups in the United States are waging a coordinated campaign to undermine the CLARITY Act. The moves come as Senate lawmakers prepare to hold a committee session the week of May 11, aiming to get the legislation to President Trump’s desk for his signature by July 4.
The American Bankers Association, the Bank Policy Institute, the Consumer Bankers Association, the Financial Services Forum and the Independent Community Bankers of America released a joint statement announcing Reject them For the Telles-Alsoprox settlement formula for stablecoins. The irony is that representatives of these parties participated in the negotiation of this very settlement during closed-door negotiations that lasted several months.
BANKS STILL OPPOSE THE CLARITY ACT STABLECOIN COMPROMISE
Major U.S. banking trade groups say the new stablecoin rate of return “is not up to par,” even after senators signaled the deal was likely final.
The latest deal would prohibit crypto companies from paying interest or yields just for holding… pic.twitter.com/BNtZZf18KV– Coinbureau (@coinbureau) May 5, 2026
The line between traditional finance (TradFi) and decentralized finance (DeFi) is becoming clearer than ever in crypto politics. As the CLARITY Act advances through the Senate and institutional capital monitors every procedural development, the banking lobby’s latest attempt to disrupt stablecoin regulation sets the stage for a decisive showdown in U.S. financial policy.
Banks claim to reduce their capital by 20%, but…
The banking alliance’s objection focuses on Section 404 of the CLARITY Act, which regulates return limits on stablecoins used for payments. The coalition alleges that the Teles-AlsoProx settlement language contains flaws, including regarding the ability of digital asset platforms to distribute rewards tied to a customer’s holding period or account balances, even if those rewards are not technically classified as interest.
The banks’ internal research reportedly claims that yield-generating stablecoin alternatives could remove enough liquidity to reduce the capital available for lending to the consumer, small business and agricultural sectors by up to 20%.
On May 6, the American Bankers Association stepped up its actions by launching a targeted advertising campaign in Washington, DC, funded by more than 3,000 member banks and with an estimated budget of $2.5 million, in which it described stablecoin rollback mechanisms as “unregulated deposit theft.” 200 bank executives also plan to travel to the Capitol on May 9 to lobby Senate offices directly before the amendments close on May 10.
The coalition also cites a 2026 report from the Office of the Comptroller of the Currency (OCC) estimating the risks of deposit flight at $300 billion by 2028 if Section 404 loopholes are not closed, as well as Federal Reserve data showing that $120 billion in stable reserves already reflects returns on money market funds.
For his part, Senator Tillis, who participated in drafting the regulation, responded directly, emphasizing that traditional financial sector players have been at the negotiating table for months and that the current text explicitly prevents stablecoin rewards from functionally mimicking the benefits of bank deposits. The senator noted that some parties might simply oppose the passage of the CLARITY Act as a whole and use the controversy over stablecoin returns as an excuse to block the project indefinitely.
Crypto Industry Sees $1 Trillion at Stake and Clear Obstruction of the Law
The crypto industry sees the banking lobby’s strategy very clearly. Alex Thorne, head of research at Galaxy Digital, noted that Senator Tillis had been criticized by the digital assets industry specifically for including banks in the negotiations from the start, and that the coalition’s refusal to make the resulting concessions revealed a strategy of obstruction rather than constructive adjustment.
Galaxy Digital analysts expect that the passage of the CLARITY Act could open the door to $1 trillion in institutional inflows by establishing regulatory certainty that has kept big money out of the market.
Brian Armstrong, CEO of Coinbase, called the banks’ tactics “anti-competitive sabotage,” arguing that yield caps would deter the 15 million U.S. stablecoin holders already accustomed to using them for payments and settlements.
David Sachs, in charge of the crypto file at the White House, also laid out the administration’s position in a sharp tone, declaring: “Bank greed or ignorance is hindering America’s digital future,” emphasizing the Trump administration’s support for the bill.
Senator Cynthia Lummis, chair of the Senate Digital Assets Subcommittee, made the most difficult decision, saying:
“The digital assets industry has waited too long. Companies are now deciding where to incorporate and do business, and without clear rules, many will head overseas. We must implement the Clarity Act now. America’s financial future depends on it.”
The banking lobby is not fighting a loophole, it is fighting a law that would succeed and change the rules of the game.
The article Banks’ war against the CLARITY law: attempts to obstruct the regulation of stable currencies appeared first on Cryptonews Arabic.
