Stablecoin reward rules will determine the CLARITY Act's final passage

Community banks' local lending capacity could be significantly damaged if the CLARITY Act is passed with provisions allowing stablecoin rewards. The American Bankers Association warns that reward-bearing stablecoins would accelerate deposit outflows from the banking sector. This risk is the primary sticking point in the U.S. Congress's debate over the CLARITY Act crypto market structure bill. The bill's current regulatory plan bans stablecoin issuers from directly paying interest to holders. The American Bankers Association estimates that in the reduction in lending due to deposit shifts could reach as much as $8.7 billion in Iowa alone.