US Banking Groups Push for Stricter Stablecoin Yield Rules

In a joint letter addressed to Majority Leader John Thune and Minority Leader Charles Schumer, the American Bankers Association and the Independent Community Bankers of America, alongside 76 state associations, requested a revision of Section 404. While the bill officially prohibits direct interest on payment stablecoins, the groups contend that the existing language leaves too much room for activity-based incentives. They fear these rewards function as de facto interest, encouraging users to treat stablecoins as yield-bearing assets rather than transactional payment tools.

Community banks rely on deposits to fund essential services, including small business loans, agricultural credit, and mortgage lending. Industry leaders warn that if stablecoin issuers can mimic the benefits of traditional bank accounts, the resulting migration of capital could undermine local lending capabilities. The coalition is pressing for the removal of ambiguous language surrounding balance-linked incentives to ensure stablecoins remain strictly for payments. As the Senate prepares for its August recess, these unresolved reward structures remain a primary point of friction between traditional financial institutions and the crypto sector.