The Association of Military Banks of America (AMBA) joined seven other leading banking trade associations in urging Senate leaders to strengthen provisions in the CLARITY Act designed to address the potential impact of payment stablecoins on bank deposits and credit availability. In a joint letter to Senate Majority Leader John Thune and Democratic Leader Chuck Schumer, the associations expressed support for establishing a durable regulatory framework for the growing digital-asset market while emphasizing the importance of protecting consumers, communities, and the stability of the U.S. financial system.
A central concern raised by the associations is the potential for payment stablecoins to offer yield, interest, or similar financial incentives that could encourage consumers to move funds away from traditional bank deposits. Deposits provide the foundation that enables banks to extend credit for mortgages, education, small businesses, agriculture, and other community needs. They also help financial institutions maintain access to credit and banking services for servicemembers, veterans, and military families. The associations warned that significant deposit outflows could be particularly consequential for community and mission-driven banks that depend heavily on deposits to support relationship-based lending.
While the CLARITY Act currently seeks to prohibit interest or yield on payment stablecoins while permitting certain transaction-based rewards, the associations cautioned that the existing language could leave loopholes allowing stablecoin providers to structure incentives that effectively operate like interest payments. The groups recommended targeted amendments to strengthen the prohibition, including changes to the standard used to determine whether stablecoin incentives resemble bank deposit interest and the removal of language allowing rewards to be calculated based on a customer’s balance, duration, or tenure.
AMBA joined the American Bankers Association, Bank Policy Institute, Consumer Bankers Association, Financial Services Forum, Independent Community Bankers of America, Mid-Size Bank Coalition of America, and National Bankers Association in signing the letter. Collectively, the organizations emphasized that responsible digital-asset innovation and a strong banking system can coexist, but urged Congress to address deposit-flight risks before they diminish banks’ ability to provide credit to American consumers, small businesses, and communities.
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