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Stablecoin Proposal Still 'Falls Short' Of Protecting Bank Deposits: US Banks Say
Authored by Brayden Lindrea via CoinTelegraph,.com,
America’s largest banking groups said they remain dissatisfied with the CLARITY Act’s newly proposed language on stablecoin yield, arguing that it fails to protect bank deposits.
In a statement Monday, the bankers acknowledged that US Senators Thom Tillis and Angela Alsobrooks are “seeking to achieve the correct policy goal” in prohibiting stablecoin yield but noted that the CLARITY Act’s “proposed language” currently “falls short of that goal.”
“It is imperative that Congress get this right,” the American Bankers Association said in a joint statement with the Bank Policy Institute, Consumer Bankers Association, Financial Services Forum and Independent Community Bankers of America.
The dispute between bankers and the crypto industry over stablecoin yield has stalled the bipartisan bill, which passed the House of Representatives in July by a 294-134 vote.
There are concerns that the CLARITY Act may not pass before the US midterm elections in November 2026, which could further hinder its progress.
Banking groups have previously cited studies suggesting that widespread stablecoin adoption could lead to trillions in outflows from the US banking system, particularly from community banks, which may not have enough balance-sheet flexibility to absorb these outflows without resorting to higher-cost wholesale borrowing.
In the Monday statement, the bankers also cited an article by Stanford-trained economist Andrew Nigrinis to argue that stablecoin yields driving bank deposit outflows “could reduce all consumer, small-business, and farm loans by one-fifth or more, making it essential for the prohibition to be clear and transparent.”
However, White House economists reported in April that banning stablecoin yield may increase bank lending by only $2.1 billion, a marginal net increase of about 0.02%.
Bankers want “loophole” closedThe bankers contested the language of Section 404, arguing that it allows crypto platforms to pay users bank-like interest or yield outside traditional rules.
Extract of the “SEC 404. Prohibiting interest and yield on payment stablecoins” document. Source: Alex Thorn
“This is a significant loophole that must be addressed,” the bankers said, adding that they will be sharing “detailed suggestions for strengthening the proposed language with lawmakers in the coming days.”
However, Tillis said the current text of the CLARITY Act strikes a compromise by prohibiting stablecoin rewards on idle balances while allowing crypto platforms to “offer other forms of customer rewards.”
“Most importantly, it helps put us on a bipartisan path to pass the CLARITY Act, providing the regulatory certainty needed to foster innovation. Some in the banking industry may not want either of these things to happen, and we respectfully agree to disagree.”
The current text of the CLARITY Act was made public on Friday, with Coinbase and other members of the crypto industry pushing for a Senate markup next week.
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"Moderate" Democrat Abigail Spanberger Considers Tax On Gym Memberships And Streaming Services, Among Other Ideas
Virginia Governor Abigail Spanberger is facing backlash after refusing to rule out new taxes on everyday services like gym memberships and streaming subscriptions, according to the Daily Mail.
During an interview with 8News, the Virginia governor was asked whether she would sign legislation expanding the state’s sales tax to cover a long list of services. Rather than rejecting the idea outright, Spanberger said any proposal that seems “reasonable” should at least be part of the conversation as lawmakers search for new sources of revenue.
"I think every idea, as long as it's reasonable and makes some amount of sense, should be entertained should be discussed," she said.
"You mentioned the one on streaming services, you used to buy a DVD, there was a sales tax. Streaming is different," she added. "I recognize there is value in having these conversations, but whether I'd ever sign a bill is wholly predicated on what is actually in the bill, and how it is outlined."
"I think there are worthy conversations to be had about what revenue generation looks like into the future as our economy changes in so many ways."
The Daily Mail writes that the proposals floated in Richmond this year would have expanded taxes to services that have traditionally been exempt, including self-storage units, dry cleaning, vehicle repairs, counseling, website design, cloud storage, and digital subscriptions.
One measure, HB978, would have specifically added sales taxes to fitness memberships and athletic clubs. None of the bills cleared the General Assembly before lawmakers adjourned in March, so Spanberger hasn’t had to make a final decision yet.
Critics argue the proposals are a preview of where Virginia’s tax policy could be heading under its new Democratic leadership.
Spanberger campaigned as a moderate but has already drawn criticism from conservatives over several early policy moves, and her comments are likely to add fuel to that debate. And for anyone hoping their gym membership or Netflix bill might be safe — Virginia lawmakers appear to be eyeing both your workout routine and your weekend binge-watch. Because apparently paying taxes on your paycheck, groceries, and utilities just wasn’t ambitious enough.
Tyler Durden Tue, 05/05/2026 - 12:15