Treasury Secretary Scott Bessent (@SecScottBessent) has pledged to use new intervention powers written into the CLARITY Act if stablecoin adoption begins to drain deposits from community bank
Treasury Secretary Scott Bessent (@SecScottBessent) has pledged to use new intervention powers written into the CLARITY Act if stablecoin adoption begins to drain deposits from community banks, adding a public commitment to the bill's protective mechanisms just days before a critical Senate vote.
In a statement backing the legislation, Bessent described the bill as essential to the United States winning the global race on new technology. Bessent has framed the legislation as a national security matter, arguing the US should author global digital asset rules instead of importing them. He also credited the GENIUS Act, the stablecoin-specific law passed earlier this year, with keeping stablecoin infrastructure onshore.
His remarks come as opposition from the traditional banking sector intensifies. Eight US banking groups are urging the Senate to tighten the CLARITY Act's stablecoin reward restrictions, arguing the latest language still leaves room for interest-like payments.Banks are specifically targeting a proposed deposit-flight "circuit breaker," saying regulators should not have to wait for substantial losses of bank deposits before intervening.
If consumers and businesses are encouraged to move their money from bank deposits into stablecoins that offer interest-like rewards, those funds will no longer support local lending in the same way.Much of the money backing those stablecoins would instead be invested in Treasury securities and other reserve assets, and at scale that migration could put billions of dollars of lending capacity at risk, with smaller and rural communities among the first to feel the consequences.
The dispute pits banks' concerns about deposits and lending against crypto advocates' argument that stablecoin rewards have not been shown to cause deposit flight and that lawmakers have already addressed the issue.
The CLARITY Act aims to build a new rulebook for cryptocurrencies and other digital assets. It cleared the Senate Banking Committee in May, but floor action has been stuck because leaders have not locked down the 60 votes needed to overcome a filibuster.Cloture needs 60 votes and Republicans hold 53 seats, so even with every Republican voting yes the bill needs seven more.
Two Republican senators, Josh Hawley and Jerry Moran, declared they would oppose the CLARITY Act if its text is not amended to address the stablecoin reward issue.The stablecoin yield issue adds to the other large roadblock that CLARITY faces: the ethics provision, which depends on negotiations with the White House and has not been agreed upon.
With the cloture vote scheduled for Tuesday, the coming days will test whether the administration's assurances on community bank protections are enough to bring wavering senators on board.
Sources:CoinDesk: Banks escalate stablecoin rewards fight ahead of CLARITY Act voteAmerican Banker: Community banks and the CLARITY Act debateBitcoin.com News: Community banks stall CLARITY Act over stablecoin rewards
