The American Bankers Association, the Independent Community Bankers of America, and 76 associations in the United States have sent Senate leaders a set of targeted revisions to the Clarity Act, which is still pending before the Senate.
The July 13 letter went to Majority Leader John Thune and Minority Leader Chuck Schumer. It focuses on Article 404.
Targeted amendments that banks want in the Clarity Law
Section 404 of the CLARITY Act targets stablecoin returns. It’s bars Parties covered by payment Returns only to hold stablecoins for payment or to provide a return equivalent to interest on bank deposits. It maintains activity-based rewards associated with transactions or use of the platform.
Signatories propose limited changes to the section, as well as a printed mark of the modified text. They want lawmakers to:
- The word “only” is deleted from subsection (1)(a).
- Delete the phrases “on a payment stablecoin balance” and “on an interest-bearing bank deposit” from (1)(b).
- Replace the “economic or functional equivalent” test with the “substantially similar” standard, wherever it appears in Section 404.
- Subsection (3)(b) is deleted in its entirety.
Bankers say this would prevent companies from engineering incentives to evade the ban. They also argue that the rewards subsection works against the ban next to it.
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Banks warn of the risk of deposit flight
The groups said they support responsible innovation and a well-regulated digital asset market but want sturdier guardrails. In the letter, the bankers expressed concerns about the current language in Section 404.
“In particular, we remain concerned that the bill’s ambiguity could encourage stablecoin arrangements to effectively serve as an alternative to deposits, despite Congress’ long-standing and clearly stated intent that payment stablecoins should serve as transaction instruments rather than store-of-value products,” the association said. He said.
Banking groups say that the risk of deposit flight is tangible and not hypothetical. When local deposits shrink, banks recycle the money back to their own cities.
These deposits finance home loans, small business credit, and farmer financing. The letter emphasizes that lending is the engine behind domestic growth.
Five American banking lobbyists did similar work Arguments in a previous message this year. This round sharpens specific legal reforms.
Stablecoin yield is one of three major disputes holding up the bill. Lawmakers remain divided over Section 604 Developer protection and ethics rules.
President Trump has Get senators to act quickly. At the same time, Two sets, Nobel and federal law enforcement organizedThey supported the bill despite the open battles.
The Senate faces a narrow window before its August recess. It is still unclear whether leaders will be able to resolve stablecoin, developer, and ethics disputes in that window.
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