Rob Nichols, the CEO of the American Bankers Association (ABA), sent an urgent letter on Sunday to the chief executives of banks across the nation. He called for “immediate action” to address what he described as a loophole related to stablecoin yields within the Digital Asset Market Clarity Act. This communication comes just days before the Senate Banking Committee is set to review the bill on Thursday.
Dated May 11, which was Mother’s Day, the letter was directed at the CEOs of banks that are members of the ABA. It urged these leaders to reach out to their respective senators and encourage their staff to do the same before the committee’s scheduled meeting on May 14 to discuss the legislation.
“I am writing to ensure every bank leader in the country is aware of a critical advocacy effort that demands your immediate involvement,” Nichols stated in the letter. He cautioned that without additional amendments, “we believe the current proposal would needlessly encourage the movement of bank deposits into payment stablecoins, posing a risk to both economic growth and financial stability”.
CLARITY Act vote looms
The ABA’s urgent campaign followed the Senate Banking Committee’s announcement on Friday of its intention to review H.R. 3633, the Digital Asset Market Clarity Act of 2025. This bipartisan legislation aims to create a complete federal regulatory system for digital assets, settle ongoing disputes over authority between the SEC and CFTC, and establish regulations for cryptocurrency trading.
The timing of the letter faced strong public criticism from Paul Grewal, the Chief Legal Officer at Coinbase, who commented on X that the ABA’s concerns were unfounded. “Perhaps the CEO didn’t receive the message from the individuals who were actually present at the White House in meeting after meeting,” Grewal wrote. “We have already engaged immediately. You succeeded in eliminating ‘idle yield.’ I know this because I was present — you were not. Accept the victory and move on. Stop consuming the time of the Senate and the American public.”
Senator Bernie Moreno, a member of the Senate Banking Committee, responded to the ABA on social media, stating that “the banking cartel is in a state of full panic.” He accused the association of misleading lawmakers by labeling stablecoin yield as a “loophole,” a term he considered an insult to the bipartisan efforts already undertaken during the GENIUS Act discussions.
Moreno declared his intention to vote in favor of advancing the Clarity Act on Thursday, stating: “Innovation, freedom, and the American people will prevail.”
The posts from Grewal and Moreno alluded to months of discussions that included at least three meetings at the White House between crypto industry representatives and banking trade associations, all focused on resolving the stablecoin yield issue.
These discussions resulted in an agreement, brokered by Senators Thom Tillis (R-N.C.) and Angela Alsobrooks (D-MD.), which prohibits passive yield on stablecoin holdings while allowing for certain narrowly specified rewards based on activity. The ABA and its partner banking organizations have argued that this agreement is insufficient.
During a speech at Consensus Miami on May 7, Grewal expressed his support for the current agreement as “fair” and characterized the banking industry’s ongoing resistance as bitterness over a battle they had essentially already won.
Patrick Witt, who organized the White House meetings on stablecoin yield in February, mentioned that he personally invited Nichols and other banking trade association CEOs to participate — and they chose not to attend.
The banking industry’s failing crypto lobby
For months, the banking industry has contended that even limited stablecoin yield — especially when channeled through exchanges and third-party services rather than directly from issuers — could lead to significant withdrawals of deposits from banks with federal insurance.
A collaborative fact sheet published by the ABA, Bank Policy Institute, Consumer Bankers Association, Financial Services Forum, and Independent Community Bankers of America referenced a Treasury Department study estimating that stablecoins could cause up to $6.6 trillion in deposit withdrawals if yield is allowed.
This number has been challenged within the executive branch. In April, the White House Council of Economic Advisers published a report concluding that banning stablecoin yield “would have a minimal impact on protecting bank lending,” estimating that such a ban would only boost bank lending by 0.02%. The ABA contested the findings of that report shortly after it was released.
In December, Nichols sent a joint letter with 52 state bankers associations to Congress, pressing lawmakers to close the yield loophole. In April, the ABA also joined these groups in sending a similar letter to the OCC.
The Senate Banking Committee’s review on May 14 marks a significant procedural obstacle for the Clarity Act. Even if the bill passes the committee, it will still need 60 votes in the full Senate, reconciliation with the version from the Senate Agriculture Committee, alignment with the House-passed bill from July 2025, and a signature from the President.
The White House has established a target date of July 4 for the bill to be passed.
