Banks Slam New Stablecoin Compromise While Public Just Shrugs

The Senate’s stalled effort to regulate stablecoins under the CLARITY Act took another hit this week as the banking sector publicly rejected the latest compromise meant to bridge the divide between crypto operators and traditional financial institutions. Despite months of bipartisan negotiations led by Senators Thom Tillis (R-NC) and Angela Alsobrooks (D-MD), banks remain unconvinced that the new language sufficiently blocks crypto platforms from offering interest-like rewards that could drain deposits from traditional banks.

Crypto companies like Coinbase had hailed the compromise as a win, celebrating the preservation of “real usage” rewards on stablecoins while banning passive yield that resembles bank interest. Coinbase’s chief policy officer Faryar Shirzad enthusiastically called for swift passage, with CEO Brian Armstrong urging lawmakers to “Mark it up.”

But the American Bankers Association, Bank Policy Institute, and other major banking groups fired back, warning the proposal leaves loopholes wide open. Their joint statement flagged the allowance of “activity-based or transaction-based rewards” as a potential backdoor for crypto firms to mimic interest payments. Banks also criticized the vague language permitting rewards based on how long or how much stablecoin users hold, which could encourage the very deposit flight the bill aims to prevent.

Senator Tillis defended the compromise as a “substantially improved, consensus-based product” crafted with input from all stakeholders, including banks. Yet he acknowledged the disagreement and insisted the bill moves forward despite the banking sector’s objections.

Meanwhile, the general public appears largely disengaged from the regulatory tussle. Recent polls show voters distrust crypto operators and remain skeptical of former President Trump’s ability to oversee the sector, but there is no widespread outcry demanding urgent reform. This apathy could embolden both crypto interests and banks to keep pushing their agendas without fear of voter backlash.

The CLARITY Act’s fate remains uncertain as the banking committee eyes a markup vote this month. But with entrenched opposition from powerful financial institutions and a public that “really doesn’t give a damn,” meaningful stablecoin regulation in the US looks like an uphill battle. In the meantime, the Trump family’s own crypto ventures, like World Liberty Financial, continue to stir controversy over pay-to-play schemes and governance fights — a stark reminder of the corruption risks lurking behind the flashy digital token world.