Community Banks Stall Clarity Act Over Stablecoin Rewards

Regulation & LegalPublished:Aug 10, 2026, 8:08 PMCommunity Banks Stall Clarity Act Over Stablecoin Rewards

While Senate Democrats have their own issues with the CLARITY Act, community bankers would be leveraging their ties with Senate Republicans to explain the effects that enshrining stablecoin rewards would have on their deposit volumes and credit capabilities.

WRITTEN BYSergio GoschenkoSHAREPublished: Aug 10, 2026, 8:08 PM

Key Takeaways

• Community banks lobbied the GOP against the CLARITY Act, fearing stablecoin rewards will drain deposits.
• Senators Hawley and Moran now oppose the bill unless amended, fracturing crucial Republican support.
• Coupled with unresolved ethics disputes, CLARITY’s chances of passing in September have plummeted.

Community Bankers Rise Against CLARITY Act On Stablecoin Rewards

While the issue of stablecoin rewards in the Digital Asset Market Clarity Act, commonly known as the CLARITY Act, seemed to have been pacted a long time ago, it has resurfaced recently with the help of community bankers.

Community banks, which are locally owned institutions that typically hold less capital than their national counterparts, have raised the alarm about the effects that passing CLARITY as it is today would have on their ability to attract deposits and, consequently, on their credit capabilities.

Punchbowl News reported that weeks of heavy lobbying from these smaller banks have raised angst among Senate Republicans, who would have direct links with bank representatives.

“They know us. Each of us knows those people personally,” said Senator Mike Rounds, explaining why their arguments had worked and already had swayed some to oppose CLARITY.

Brad Bolton, CEO of the Community Spirit Bank, reinforced the relevance of small institutions raising these issues. “You needed unknown community bankers like me, out in the middle of nowhere, telling the senator, this is the real effect of it,” he declared.

While rewards for holding stablecoins were eliminated in the current version of CLARITY after a lengthy discussion and a compromise between banks and the crypto industry, rewards for use, which would promote stablecoins as a means of payment, are permitted.

Two Republican senators, Josh Hawley and Jerry Moran, declared they would oppose the CLARITY Act if its text is not amended to work out the stablecoin reward issue.

The stablecoin yield issue adds to the other large roadblock that CLARITY faces: the ethics provision, which depends on negotiations with the White House and has not been agreed upon.

This is why, even as a vote was filed for September by Senate Majority Leader John Thune, the odds of CLARITY passing have sunk, as the divide between the two parties and the issues being debated seems insurmountable.

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Tags in this storyCLARITY ActRegulation