US bank industry associations have challenged a Senate stablecoin bill, warning its rewards provision creates a loophole that threatens deposit stability.
According to Bloomberg, the banks are arguing that a key provision governing stablecoin rewards programmes does not adequately protect the traditional deposit base.
The American Bankers Association and the Bank Policy Institute are among the groups that issued the joint statement, describing the current draft as falling short of what is needed. The associations have said they will share detailed legislative suggestions with lawmakers in the coming days.
Dispute over yield and deposits
At the centre of the disagreement is whether stablecoins, when paired with exchange-operated reward programmes, could begin to function as yield-bearing instruments in a manner comparable to cash accounts held at banks. The associations have identified what they describe as a significant loophole: under certain conditions, the proposal would permit crypto exchanges to pay interest to users who participate in an exchange membership programme.
Banks have argued that even if funds remain within the broader financial system, such arrangements could redirect deposits away from traditional lenders, a structural concern with implications for liquidity and credit availability across the banking sector.
The dispute represents a setback for the broader crypto legislation, which has been stalled in the Senate since January 2026, when Coinbase withdrew its support from the bill. Earlier in May 2026, Coinbase stated publicly that a deal had been reached on the stablecoin yield question, and Democratic Senator Angela Alsobrooks indicated the same day that she believed the dispute had been resolved. The joint statement from the bank associations contradicts both assessments.
Legislative timeline under pressure
The renewed opposition from established banking groups is likely to further delay a bill that has already faced prolonged legislative resistance. The stablecoin rewards question sits within a wider debate over how digital assets should be integrated into the US financial system, including questions of regulatory oversight, consumer protection, and the competitive boundary between crypto platforms and chartered banks.
The associations' decision to publish their concerns publicly, rather than engage solely through closed negotiations, signals a deliberate effort to apply pressure as lawmakers continue to work on the text. The outcome of those discussions will have direct bearing on how stablecoin issuers and crypto exchanges are permitted to structure their product offerings in the US market.
