Ban on stablecoin inducements should be included in Clarity Act

With both the Senate Banking Committee and Agriculture Committee expected to mark up sections of the Digital Asset Market Clarity Act (H.R. 3633) starting Thursday, America’s Credit Unions joined organizations to oppose allowing yield and rewards on payment stablecoins.

Specifically, H.R. 3633 would establish a market structure for cryptocurrencies, provide a clear regulatory pathway for credit unions to offer digital commodity custody services, ensure stablecoins cannot be treated as a credit union or bank deposit, and clarify that credit unions offering digital asset services are not required to hold assets held in custody as liabilities on their balance sheet.

Offering any kind of compensation to stablecoin holders, including advertised yields, promotional rewards, or interest-like payments, “threaten to drain deposits from regulated institutions, constricting the credit that fuels communities across our great nation,” the letter notes, highlighting Treasury estimates that show $6.6 trillion in deposits could be at risk with such incentives.

“Every deposit represents a home loan, a small business loan, or an agricultural loan,” the organizations note, and these policies would “destroy local lending.”

Given the financial services nature of H.R. 3633, America’s Credit Unions will also work with members of both committees to ensure no provisions that would harm credit unions—including a 10% cap on credit card interest rates—are added during the markup process.

The Senate Banking Committee is expected to start its markup Thursday at 10 a.m. Eastern. The House passed H.R. 3633 in July.