Banks Oppose Tillis‑Alsobrooks Stablecoin Deal

Bank trade groups representing institutions of all sizes formally opposed the Tillis‑Alsobrooks stablecoin yield compromise on Monday. The groups that filed objections include the Bank Policy Institute, the Financial Services Forum, the Independent Community Bankers of America, the Consumer Bankers Association and the American Bankers Association. They told lawmakers the proposal “falls short.”

The compromise, released Friday by Republican Senator Thom Tillis and Democratic Senator Angela Alsobrooks, would bar interest or yield on stablecoins that resembles interest paid on bank deposits while allowing certain transaction‑linked rewards tied to stablecoin use. The banking groups said that restriction is not enough because some crypto platforms aim to pay yields to keep retail liquidity in crypto wallets.

Jaret Seiberg, managing director at TD Cowen’s Washington Research Group, wrote that the coordinated opposition matters because it includes both large national banks and community banks. He wrote, “A united front gives the banking industry more clout in this fight. It is why we believe it not a forgone conclusion that crypto will win this fight and the banks will lose.”

Seiberg wrote he does not see a middle ground that would satisfy both banks and major crypto platforms. He noted major crypto firms want to keep paying yield to retail users while banks view that practice as unacceptable. Seiberg added that proposed rules from the Office of the Comptroller of the Currency under the GENIUS Act could restrict most stablecoin yields and that banks could use those rules as leverage if the Clarity Act does not pass. Legal challenges to regulatory steps are expected.

TD Cowen said the stablecoin yield dispute could affect the bill’s schedule in the Senate Banking Committee. Seiberg wrote the disagreement could push the committee markup into June and said the August recess is the practical deadline for enacting the bill this year. He noted that for the Senate to vote by late July, the bill likely needs to emerge from committee by late June given the Memorial Day holiday and other scheduling constraints.

Executives in the crypto industry have warned about the timing. Ripple chief executive Brad Garlinghouse warned the next two weeks are critical for advancing federal crypto legislation and said the chances of passage would fall if the issue moves into the midterm campaign season.

TD Cowen has also identified other obstacles that could slow or block the Clarity Act. Those include a lack of confirmed Commodity Futures Trading Commission commissioners, a controversy tied to a crypto project associated with former President Donald Trump called World Liberty Financial, and concerns about Iran’s use of crypto payments. Separately, Senator Tillis has pressed for ethics provisions to be added to the bill, a demand that could create an additional roadblock in the Senate Banking Committee.

Passing the Clarity Act would require enough bipartisan support to clear a 60‑vote threshold in the Senate. Seiberg has previously estimated a roughly one‑in‑three chance the bill will pass this year and said unresolved policy and political hurdles could delay the effort into 2027, with final rules possibly not taking effect until later if deadlock continues.

The coordinated opposition from trade groups spans large national banks and community institutions and is now one of several factors lawmakers must address as they consider the Tillis‑Alsobrooks compromise and the broader Clarity Act before congressional recesses and the election calendar reduce the window for action.