The procedural vote on the CLARITY Act in the Senate on September 15 faces dual headwinds from two major Washington powerhouses. Just one day before the vote requiring 60 affirmative ballots, eight US banking associations sent a formal letter to Senate leaders John Thune and Chuck Schumer on September 14. The banking group demanded overhauls of key provisions before the draft bill reaches the Senate floor.
Beyond the banking sector, a coalition led by New York Attorney General Letitia James alongside 17 state attorneys general has also pushed back against the legislation. The prosecutors’ objections center on the federal preemption clause, arguing that it would curtail state-level securities enforcement powers and make it harder for local authorities to prosecute crypto fraud.
While the attorneys general are acting in the name of public protection, the banking associations’ resistance is fueled by direct commercial competition: defending deposit market share against the rise of stablecoins.
A Single Word Sparking Fund Outflows
The banking pushback centers on Section 10404 of the CLARITY Act draft, which establishes a framework for payment stablecoins. According to bank associations, the section’s wording opens a loophole allowing crypto entities to offer yield functionally identical to interest on conventional bank deposits.
The banks’ objections zero in sharply on a single word in subsection (c)(1)(A): ‘solely’. Bankers view this word as a legal basis enabling stablecoin issuers to structure reward programs based on user balances. If legalized, customers could migrate funds from traditional bank accounts to stablecoin wallets to chase crypto yield.
To close this loophole, banking associations are urging Congress to strike the word ‘solely’ from the draft while revising language referencing ‘payment stablecoin balance’ and ‘interest-bearing bank deposit’. This drafting maneuver aims to ensure stablecoin platforms cannot replicate banking functions without being subject to federal banking regulatory regimes.
Slim Odds Ahead of the Vote
The dual pressure from state law enforcement and banking lobbyists comes at an inopportune moment. Previous analyses had already pegged the CLARITY Act’s chances of passing at a modest 24 percent.
The 60-vote threshold needed to clear the procedural hurdle makes every objection costly. For the crypto industry, the September 15 showdown demonstrates that regulatory hurdles around stablecoins are no longer solely about consumer protection. Major banks are pushing back as they realize crypto products have the potential to directly siphon off customer deposits.
Reported by crypto.news.
Previously: US Senate Sets CLARITY Act Vote for September 15 - Failing 60 Votes Could Push Crypto to Singapore
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.
