Significant support has come from one of the world’s largest banks. Citigroup CEO Jane Fraser openly voiced her support for the passage of the CLARITY Act during an interview with Fox Business on Thursday, August 14. This stance provides strong momentum ahead of a procedural Senate vote scheduled for September 15, 2026. However, behind the green light, the banking industry harbors one major concern: a regulatory loophole that could siphon cash out of the traditional system.
“We haven’t given up on getting improvements to this bill, but we want to see a good bill passed,” Fraser said. Her main focus is on the stablecoin reward system, which is still permitted. Fraser warned that this practice could potentially draw customer funds out of US banks, particularly hitting small institutions that serve marginalized communities. This could adversely affect bank deposit volumes and erode their ability to extend credit in areas underserved by both crypto and major banks.
Real Threat or Exaggerated Fear?
The banking sector’s anxiety is not without reason. Bank of America CEO Brian Moynihan made a sharp calculation: a potential $6 trillion could shift from banking deposits into stablecoin products. Armed with that estimate, the American Bankers Association (ABA), the ICBA, and 76 state-level banking associations urged the Senate to tighten Section 404 of the draft bill before it reaches the full debate floor.
Under the legal framework of the GENIUS Act of 2025, the US government has indeed banned stablecoin issuers from offering direct interest. The problem is that crypto exchange platforms are still free to structure their own reward programs. Senators Tillis and Alsobrooks previously mediated this issue with a compromise proposal: ban passive yields, but allow incentives for active use, such as transactions and payments. The 309-page Senate committee agreement published last May still retains this middle-ground structure.
White House Calculations and Crypto’s Defense
The question is, will the impact of this capital exodus truly disrupt the public credit system? The White House Council of Economic Advisers has questioned Moynihan’s calculations. According to their data, a total ban on stablecoin yields would only increase bank lending capacity by about $2.1 billion - an amount equivalent to just 0.02% of total national lending.
Crypto industry representatives, naturally, are pushing back against the banking sector’s demands. Coinbase Chief Policy Officer Faryar Shirzad pointed out that banking institutions have already secured strict restrictions in the latest draft. Shirzad believes the current compromise structure is balanced enough and must be preserved to reward users who actively transact on crypto platforms.
The tug-of-war between the appeal of crypto incentives and the resilience of local credit now awaits the Senate’s gavel. Until the voting schedule arrives next month, the banking lobby is certain to continue maneuvering to alter the final text.
Reported by crypto.news.
Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
