The American Bankers Association placed stablecoin rewards at the forefront of its 2026 policy agenda, escalating an industry-wide campaign against digital-dollar incentive programs that banks claim threaten deposit bases and community lending capacity.

The trade group’s newly released Blueprint for Growth explicitly calls on Congress to “stop payment stablecoins from becoming deposit substitutes that slash community bank lending by prohibiting paying interest, yield or rewards regardless of the platform.“

ABA President and CEO Rob Nichols said the priorities were developed through collaboration with all 52 state bankers’ associations to advance policies that “bolster the economy, expand access to credit and enhance competition in the financial services marketplace.“

The document positions stablecoin yield restrictions as the association’s leading economic priority ahead of fraud prevention, regulatory threshold indexing, and support for minority-serving financial institutions.

Banking Industry Intensifies Pressure on Lawmakers

The coordinated push comes as Senate Banking Committee negotiations over digital asset market structure legislation remain deadlocked over stablecoin reward provisions.

Banking executives have spent months warning that yield-bearing tokens could trigger massive deposit outflows, with Bank of America CEO Brian Moynihan estimating that $6 trillion in deposits could migrate into stablecoins under permissive regulatory frameworks.

JPMorgan CFO Jeremy Barnum also warned during the bank’s fourth-quarter earnings call that interest-bearing stablecoins risk creating “a parallel banking system that sort of has all the features of banking, including something that looks a lot like a deposit that pays interest, without the associated prudential safeguards.“

Community bankers have been particularly vocal, with the Community Bankers Council urging Congress in early January to close what it called a “loophole” allowing stablecoin issuers to indirectly fund yield through exchange partners.

The group warned that large-scale deposit outflows could reduce credit availability for small businesses, farmers, students, and homebuyers in local communities.

Senator Tim Scott’s draft crypto market structure bill released January 9 includes language prohibiting digital asset service providers from paying interest or yield solely for holding stablecoins, though the provision allows activity-based rewards tied to functions like staking and liquidity provision.

Crypto Coalition Mobilizes Against Expanded Restrictions

A coalition of 125 crypto and fintech organizations, including Coinbase, PayPal, Stripe, Ripple, and Kraken, delivered a forceful rejection of expanded yield restrictions in December.

The Blockchain Association-led group argued that banking industry efforts represent “overtly protectionist” measures rather than consumer protection, noting that banks face no similar restrictions on credit card rewards despite engaging in riskier balance-sheet activities.

“The push to restrict stablecoin rewards beyond that agreed to in GENIUS is not a technical refinement or a consumer protection fix,” the coalition stated.

“It would prohibit the same types of incentive programs for stablecoin payments that banks have long offered on credit cards and other types of payment services.“

Just yesterday, Circle CEO Jeremy Allaire called banking concerns “totally absurd” during a World Economic Forum panel, drawing parallels to historical opposition to money market funds.

“The exact same arguments were made,” Allaire stated, noting that roughly $11 trillion in money market funds has grown without preventing lending activity.

He emphasized that all major stablecoin regulations prohibit issuers from paying interest directly, while partner platforms may offer rewards based on commercial arrangements.

“Rewards around financial products exist in every balance that you have with a credit card that you use,” Allaire said.

The crypto coalition disputed Treasury projections suggesting yield-bearing stablecoins could result in up to $6.6 trillion in deposit flight, citing analysis that found no evidence of disproportionate deposit outflows from community banks.

The groups questioned how banks can claim deposit constraints while holding $2.9 trillion in reserve balances at the Federal Reserve.

Coinbase CEO Brian Armstrong said the exchange could not back Scott’s draft bill, citing provisions that would eliminate stablecoin rewards.

These divisions come as global stablecoin transaction volumes reached $33 trillion in 2025, up 72% from the previous year, with USDC processing $18.3 trillion.

Bloomberg Intelligence predicted that flows could reach $56 trillion by 2030 as institutional payment infrastructure adoption accelerates.

For now, the Banking Committee may postpone further work until late February or March, following Coinbase’s withdrawal of support and divided attention to the new housing policy agenda demanded by Trump.

However, the Senate Agriculture Committee has scheduled a markup of competing legislation for January 27 that takes a fundamentally different approach by excluding payment stablecoins from CFTC authority entirely and deferring regulation to frameworks like the GENIUS Act rather than setting specific yield rules.

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