ABA CEO Urges Banks to Pressure Senators on Stablecoin Caps

American Bankers Association CEO Rob Nichols sent a Sunday night letter asking bank leaders to contact their senators and press for tighter limits on stablecoin rewards ahead of a Senate Banking Committee markup scheduled this week.

In the letter, Nichols argued the current proposal does not sufficiently prevent crypto firms from offering interest-like payments on stablecoins. He warned the language could encourage customers to move funds from bank deposits into payment stablecoins and said the ABA wants clearer rules to protect traditional and community banks.

Negotiators Sens. Angela Alsobrooks and Thom Tillis released draft language on May 2 that would bar covered parties from paying any form of interest or yield to U.S. customers solely for holding stablecoins, and from payments that are economically or functionally equivalent to interest on a bank deposit. The draft would permit activity-based or transaction-based rewards tied to bona fide activities.

Bank trade groups say the May 2 text leaves exceptions that platforms could use to provide yield while avoiding the prohibition. A coalition of financial associations wrote to Senate Banking Committee Chair Tim Scott and Ranking Member Elizabeth Warren on May 8 requesting technical changes and asking for clarity on whether certain schemes would be allowed, including a flat monthly payment that increases with a user’s stablecoin balance.

Crypto companies and some industry negotiators argue activity-based incentives, such as transaction rebates, should remain allowed because outright bans on rewards would limit products. After extended talks among lawmakers, the White House, industry executives and bank groups, the Alsobrooks-Tillis compromise won support from Coinbase, which had earlier withdrawn backing over stablecoin treatment; several major banking groups continue to say the compromise is insufficient.

Nichols asked bank executives to use their relationships with senators to seek changes before the committee vote. The markup will shape a federal framework for cryptocurrencies and clarify which federal agencies oversee parts of the industry.