77 State Banking Associations Seek to Ban Stablecoin Balance-Based Rewards in CLARITY Act

Seventy-seven state banking associations have petitioned the Senate to amend the CLARITY Act by modifying Section 10404(c)(1) and deleting subsection 10404(3)(B) to ban rewards tied to stablecoin balances or holding duration, according to Crypto Briefing. The coalition, backed by the American Bankers Association and Independent Community Bankers of America, sent the letter to Senate leadership on September 10.

The target of the amendment campaign is Coinbase's USDC rewards program, which pays users for simply holding the dollar-pegged stablecoin. Banking groups argue that stablecoin issuers offer "activity-based rewards" that function as de facto interest payments, which the coalition wants sealed shut. Banking groups believe stablecoins should function primarily as transactional tools for moving money quickly and cheaply, not as store-of-value products competing with savings accounts.

The banking groups claim there could be "real-world consequences" if stablecoins successfully entice deposits away from traditional institutions, including reduced credit availability for mortgages and small business loans. No independent economic analysis is cited verifying this claim; the assertion of consequences is stated by the coalition without measured harm data.

A nearly identical effort in July 2026 saw 76 state associations send a similar letter. The September push adds one more state association to the coalition. The Senate is approaching a cloture vote on the CLARITY Act scheduled for September 15, narrowing the window for amending the bill. The Senate Banking Committee advanced the CLARITY Act with a 15-9 bipartisan vote in May 2026.

If the Senate adopts the banking coalition's proposed amendments, the immediate impact would fall on the attractiveness of yield-bearing stablecoin products; without the ability to offer balance-based or time-based rewards, issuers and platforms would need to find other ways to incentivize holding. The source does not include any counter-argument from Coinbase, Circle, or other stablecoin issuers responding to the proposed amendments.