American Bankers Attempt Last Ditch Effort To Kill Crypto Market Structure Bill Regarding Stablecoins

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American Bankers Association (ABA) CEO Rob Nichols sent an emergency Sunday letter to every bank CEO in the country, urging “immediate engagement” against what he called a stablecoin yield loophole in the Digital Asset Market Clarity Act, days before a Senate Banking Committee markup scheduled for Thursday. The letter, dated May 11 — Mother’s Day — and addressed to ABA member bank CEOs, asked bank leaders to contact their senators and mobilize their employees to do the same before the committee convenes for a scheduled May 14 executive session on the bill. “I am reaching out to make every bank leader in this country aware of an urgent advocacy fight that requires your immediate engagement,” Nichols wrote, according to the letter. He warned that, without further changes, “we believe the current proposal would unnecessarily incentivize the flight of bank deposits into payment stablecoins, putting both economic growth and financial stability at risk”. CLARITY Act vote looms The ABA’s emergency outreach came hours after the Senate Banking Committee on Friday announced plans to mark up H.R. 3633, the Digital Asset Market Clarity Act of 2025 — a bipartisan bill that would establish a comprehensive federal regulatory framework for digital assets, resolve longstanding jurisdictional questions between the SEC and CFTC, and set trading rules for crypto markets. The timing of the letter drew sharp public pushback from Coinbase Chief Legal Officer Paul Grewal, who posted on X that the ABA’s alarm bells were misplaced. “Maybe the CEO didn’t get the message from the people actually in the room at the WH in meeting after meeting,” Grewal wrote. “We’ve already had ‘immediate engagement.’ You got ‘idle yield’ killed. I know because I was there — you weren’t. Take yes for an answer. Move on. Stop wasting the time of the Senate and the American people.” Sen. Bernie Moreno, a member of the Senate Banking Committee, fired back at the ABA in a social media post, saying “the banking cartel in full panic mode” and accusing it of deceiving lawmakers by characterizing stablecoin yield as a “loophole” — a term he said was an insult to the bipartisan work already done during the GENIUS Act debate. Moreno said he would vote to advance the Clarity Act Thursday, declaring: “Innovation, freedom, and the American people will win. Grewal and Moreno’s posts referenced months of negotiations that included at least three White House-convened sessions between crypto industry representatives and banking trade groups aimed at resolving the stablecoin yield dispute. Those talks produced a compromise, negotiated by Sens. Thom Tillis (R-N.C.) and Angela Alsobrooks (D-MD.), that bans passive yield on stablecoin balances while permitting certain narrowly defined activity-based rewards. The ABA and its allied bank groups have said that framework does not go far enough. Speaking at Consensus Miami on May 7, Grewal said he supports the current compromise as “decent” and described the banking sector’s continued opposition as sour grapes over a fight they had already largely won. Patrick Witt, who hosted the White House stablecoin yield meetings in February, said he personally invited Nichols and other bank trade CEOs to attend — and they declined. The banking industry’s failing crypto lobby The banking industry has spent months arguing that even partial stablecoin yield — particularly when routed through exchanges and third-party platforms rather than issuers directly — could trigger massive deposit outflows from federally insured banks. A joint fact sheet released by the ABA, Bank Policy Institute, Consumer Bankers Association, Financial Services Forum, and Independent Community Bankers of America cited a Treasury Department report estimating that stablecoins could lead to as much as $6.6 trillion in deposit outflows if yield is permitted. That figure faces pushback from within the executive branch. The White House Council of Economic Advisers released a report in April finding that prohibiting stablecoin yield “would do very little to protect bank lending,” estimating that a ban would increase bank lending by only 0.02%. The ABA objected to that report’s findings within days of its release. Nichols sent a separate joint letter with 52 state bankers associations to Congress in December urging lawmakers to close the yield loophole, and the ABA joined those same groups in a similar letter to the OCC in April. The Senate Banking Committee markup on May 14 represents a critical procedural hurdle for the Clarity Act. Even if the bill clears the committee, it still requires 60 votes on the Senate floor, reconciliation with the Senate Agriculture Committee’s version, alignment with the House-passed bill from July 2025, and a presidential signature. The White House has set a July 4 target for the bill’s passage.

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