Banks vow to continue stablecoin rewards fight after Clarity Act setback - TheBanker.com

The Clarity Act's setback leaves the treatment of stablecoin rewards unresolved, and banks have signalled they will keep pressing the issue. At stake is whether holding a stablecoin can generate a yield-like return similar to a bank deposit — and, by extension, whether stablecoin issuers compete directly with deposit-taking institutions for customer balances.

The debate matters for several reasons. Deposit funding is a core, relatively cheap source of bank financing; if stablecoin balances offer comparable returns, some customers could shift cash out of deposits, nudging banks toward higher funding costs. For stablecoin issuers, the ability to share reserve income with holders is central to their product economics. Regulators, meanwhile, must weigh innovation and payment efficiency against consumer-protection and financial-stability concerns.

What to watch: further legislative or rulemaking activity, how regulators characterise rewards in practice, and whether banks, issuers or industry groups adjust their offerings in response. The outcome could shape how deposits, payments and digital-asset products compete — and where oversight ultimately sits.