Banks and state attorneys general challenge CLARITY Act ahead of vote

Eight banking associations and 17 state attorneys general have challenged parts of the CLARITY Act before a Sep. 15 procedural vote that requires 60 Senate votes. Summary Eight banking groups want lawmakers to tighten restrictions on rewards paid to stablecoin holders. The groups warned that interest-like incentives could pull deposits from banks and reduce lending. Seventeen state attorneys general said the bill could weaken state powers to pursue crypto fraud. The Sep. 15 vote would open debate on the bill rather than approve its final passage. Eight banking associations wrote to Senate Majority Leader John Thune and Senate Minority Leader Chuck Schumer on Sep. 14, requesting changes to the CLARITY Act before the Senate considers whether to advance it. Although the associations supported creating lasting rules for digital assets, they argued that the current language could let crypto companies offer stablecoin rewards that function like interest on bank deposits. Their requests center on Section 10404, which covers payments and incentives linked to payment stablecoins. The banking letter adds another dispute to the Senate negotiations as lawmakers try to gather the 60 votes neede...