Republican senators threaten CLARITY Act passage over stablecoin yields

An internal Republican divide in the U.S. Senate is threatening the passage of the CLARITY Act. Several GOP senators representing rural states are siding with the banking industry to restrict yields on stablecoins.

These lawmakers express concern regarding deposit flight. They argue that if cryptocurrency platforms offer competitive rewards on dollar-pegged stablecoins, such as USDC, local community banks could lose the deposits necessary to fund agricultural and small-business loans. While previous frameworks like the GENIUS Act prohibited passive yield, banks are lobbying to close loopholes regarding activity-based rewards that function similarly to interest.

Senator John Thune has filed a cloture motion for a September vote, but the opposition from senators including James Lankford and Mike Rounds has made reaching the required 60-vote threshold uncertain.