Bank Groups Warn Stablecoin Reward Proposal “Falls Short” in Senate Debate

Banking Industry Pushes Back on Legislative Compromise

Major U.S. banking associations, including the American Bankers Association, Bank Policy Institute, Consumer Bankers Association, Financial Services Forum, and Independent Community Bankers of America, have criticized a revised Senate proposal on stablecoin rewards, saying it does not adequately protect traditional deposits.

The response follows a compromise introduced by Angela Alsobrooks and Thom Tillis aimed at resolving a months-long dispute involving lawmakers, regulators and crypto firms.

Concerns Over Deposit Flight and Reward Structures

The updated language prohibits issuers from offering interest-like returns on stablecoins but allows activity-based incentives tied to transactions. Banking groups argue this creates a loophole, warning that rewards linked to balance size, holding duration or account tenure could still encourage users to shift funds away from traditional banks.

They stressed that such mechanisms could undermine the intent of preventing deposit outflows, particularly affecting smaller community lenders that rely on stable funding.

Legislative Path Faces Ongoing Challenges

The broader crypto market structure bill, which would divide oversight between the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission, continues to face hurdles.

While Senator Tillis described the compromise as a “consensus-based product,” banking groups said they will propose further revisions, underscoring ongoing tensions between financial institutions and the digital asset industry.