Banking groups and state attorneys general are challenging the CLARITY Act as the Senate nears a vote on the law on September 15. The two groups had distinct issues with stablecoin rewards and bank deposits, state enforcement authorities.
Banking Groups Continue Opposing CLARITY Act
On September 14, a group of eight banking associations wrote to John Thune, R-S.D., the Senate’s No. 2 Republican, and Democratic Leader Charles Schumer. They called for changes to the CLARITY Act before it moves further through Congress.
The groups called for “a durable regulatory framework” for the digital asset market. They also said that yield offered on stablecoins might draw customers from traditional banks.
The banking associations said, “Deposits are the foundation of the banking system.” They added deposits enable banks to dole out credit to families, small businesses and communities, and farmers.
These groups pointed out that payment stablecoins that offered incentives like deposits could lead to deposit flight. They said this could “hinder the ability of depository institutions to extend credit to their customers.”
The CLARITY Act’s Section 10404 was the specific target of the associations. They stated that the existing language might open up loopholes that enable interest payments on a stablecoin’s account balance.
They called for the elimination of “solely” from subsection (c)(1)(A) of section 10404 of the National Defense Authorization Act for Fiscal Year 2013. They also wish to withdraw other references in that provision from “a payment stablecoin balance” and “an interest-bearing bank deposit.”
The groups also called for a “substantially similar” test. This would help to avoid incentives for stablecoins that may be perceived as bank interest payments, they said.
The banking associations also requested Congress to repeal Section 10404(3)(B) in the CLARITY Act. They maintained that this provision may give the opportunity to compute the reward based on balance, duration or tenure.
New York Lawyers Express Criticism Around Enforcement Clauses
In the meantime, New York Attorney General Letitia James is taking a different tack against the bill. She said she has joined 17 other attorneys general in cautioning that the bill may make it more difficult for states to take action against crypto fraud.
James said, “As written, the Clarity Act would embolden scammers and potentially strip attorneys general of our authority to protect our states’ investors and their wallets.”
The coalition pointed to increasing losses from cryptocurrencies. Total cryptocurrency complaints submitted to the FBI in 2025 amount to $11.4 billion in losses. This was up 22% from 2024.
The attorneys general also challenged provisions with federal preemption. They said that the SEC’s expanded powers in the CLARITY Act could wreak havoc on state securities regulation.
The coalition urged states to keep their enforcement authority over digital assets. It also called on Congress to maintain the state registration systems and the federal-state partnership.
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