CLARITY Act draws 100+ amendments amid banks’ push

The Senate Banking Committee opened markup on the CLARITY Act with more than 100 proposed amendments and a wave of lobbying from banks pressing for tighter limits on stablecoin reward programs. Lawmakers are debating rules on stablecoins, decentralized finance and access to Federal Reserve services.

The central dispute concerns language that would bar rewards on idle stablecoin balances when those payments look like interest on bank deposits, while permitting incentives tied to activity such as payments or transactions. The provision is intended to prevent stablecoins from becoming substitutes for deposit accounts while allowing firms to reward customer use.

Banking groups say the current text leaves opportunities for exchanges and intermediaries to design incentives that replicate bank-like yields and draw deposits away from insured banks. Senators Jack Reed and Tina Smith filed an amendment to narrow the standard by targeting rewards that are “substantially similar” to deposit interest. Adoption of the Reed-Smith amendment would align the bill more closely with banking industry demands; rejecting it would preserve a compromise authored by Sen. Thom Tillis that allows activity-based incentives.

Lobbying activity around the reward language intensified ahead of the markup. Banking lobbyists submitted roughly 8,000 letters urging senators to tighten the rules. The crypto advocacy group Stand With Crypto reported that supporters made about 8,000 calls, sent 300,000 emails and recorded roughly 1.5 million contacts with lawmakers in favor of the CLARITY Act. State banking association leaders also urged members to contact senators before the committee vote.

Other Democratic amendments cover additional policy fights. Sen. Elizabeth Warren filed more than 40 amendments, including a proposal to bar the Federal Reserve from granting master accounts to crypto companies. A Fed master account gives an institution direct access to the central bank’s payment system; regulators and some banking groups have warned that granting such access to nonbank crypto firms could create supervisory and stability risks. The Independent Community Bankers of America criticized a prior approval of a master account for a crypto exchange and argued that giving nonbank crypto entities access to master accounts poses risks to the banking system.

Warren also proposed ethics provisions aimed at preventing conflicts of interest involving public officials and digital-asset ventures, and she has pushed for stronger guardrails before advancing the bill. Sen. Mark Warner submitted an amendment to revise the CLARITY Act’s decentralized finance section, seeking to change how the bill defines when a protocol is sufficiently decentralized to avoid bank-like obligations. Sen. Reed filed an amendment that would bar the use of cryptocurrencies as legal tender, including for tax payments.

Crypto industry groups and pro-innovation lawmakers urged the committee to retain the current compromise. Industry organizations called for a statutory framework to replace fragmented enforcement and cautioned that stricter restrictions on rewards or broader DeFi compliance could drive projects offshore or lead to business closures.

Republicans control the Banking Committee, but the bill is likely to need some Democratic support to clear the full Senate. Committee members will consider the package and the hundreds of amendments during the markup, which will reveal which provisions can hold and which may require further revision before any floor consideration.