Strengthen the Clarity Act

When Senators return from their August recess, they are scheduled to consider the Clarity Act, which, if passed, would establish the first-ever, comprehensive regulatory framework around digital assets. Many in the crypto industry are eager to see it happen.

You might be surprised to learn that America’s banks are just as eager.

In the lead-up to the September vote, crypto supporters are claiming that banks are standing in the way of the Clarity Act. They are creating false narratives, trying to distract from our substantive concern with one small section of the bill and ignoring the very reasonable solution we have suggested to get the bill across the finish line.

It’s time to set the record straight.

Rob Nichols is president and CEO of the American Bankers Association.

Banks & Clarity

The American Bankers Association, which I am honored to lead and which represents banks of all sizes, seeks to strengthen the Clarity Act, not kill it. Separate concerns from law enforcement, a dispute over ethics language and a crowded Senate calendar may pose challenges to the bill, but make no mistake, we’re working hard to improve the legislation so it can pass.

We believe the digital assets industry absolutely needs regulatory guardrails, and the Clarity Act can help provide those, if one short but crucial provision in the 600-page bill is strengthened.

The provision aims to implement a bipartisan policy goal of preventing stablecoins from becoming shadow interest-bearing “deposits,” while still enabling innovation in payments. This distinction is critical to ensure consumers’ money is safe and to avoid unintended consequences for the economy.

Congress has already expressed its bipartisan view on this issue. The 2025 GENIUS Act bars stablecoin issuers from offering interest or yield, full stop. The debate now is whether affiliates like crypto exchanges can offer interest-like rewards that could incentivize consumers to move their bank deposits to stablecoin wallets. It’s an effort to evade the prohibition in the Genius Act.

Risk to the economy

Why should Congress be worried about such a shift? Bank deposits are the lifeblood of the U.S. economy. They are used by community, midsize, regional and large banks across the country to fund the loans that get small businesses off the ground, help young families into their first mortgage and provide farmers and ranchers the financing they need to operate.

While they are an important payment innovation, stablecoins can’t match the economic impact of bank deposits, which is why Congress rightly recognized that the two are dramatically different and shouldn’t compete directly. Among other key differences, stablecoins lack certain consumer safeguards, including the FDIC insurance protection offered by bank deposits.

Note: The views expressed in this column are those of the author and do not necessarily reflect those of CoinDesk, Inc. or its owners and affiliates.