The US banking industry is jointly pressuring Congress to tighten the ambiguous stablecoin interest clauses in the CLARITY Act. According to Tokenpost reporting, on July 13 (local time), the American Bankers Association (ABA), the Independent Community Bankers of America (ICBA), and 76 state-level banking associations jointly sent a letter to Senate leadership, pointing out that the bill’s draft language on “interest,” “yield,” and “rewards” for stablecoins is poorly defined. The banks argue that vague wording could allow payment stablecoins to become de facto substitutes for bank deposits, triggering “deposit flight.” Their position: payment stablecoins should be strictly confined to a “medium of exchange” role, and any reward structure designed to circumvent the “no-interest principle” should be closed off.
Editorial Take: This News Really Targets “Cashback,” Not “Payments”
Let’s state the conclusion up front: This lobbying push isn’t aimed at the basic card-swipe function of USDT cards — it’s aimed at the business model where issuers pay interest or high cashback on your stablecoin balance.
Most USDT virtual cards work by treating the USDT you deposit as spending credit, converted and settled in real time at the point of sale — a pure “medium of exchange” use case, exactly the boundary banks are willing to accept. This basic payment functionality is barely touched by the current clause dispute. For example, MPCard’s Asia Elite variant, which runs primarily on Asia-Pacific virtual Visa rails, doesn’t rely on “earning yield on held balances” as a selling point.
The products actually in the risk zone fall into two categories:
- Products paying interest/yield on stablecoin balances: If an issuer or affiliated platform pays annualized returns on your USDT balance, that’s precisely the “yield” the ABA wants to shut down.
- Cards built around high cashback (rewards) as their core pitch: Some exchange-affiliated cards have long attracted users with USDT/platform-token cashback on spending. The cashback structures of both Crypto.com Visa and Coinbase Card could potentially fall within the scope of the “rewards” definition debate.
Expected timeline: this is only a joint letter, not a legislative outcome. Within 7 days, no card product will change; within 30 days, watch whether the Senate incorporates this clause into a formal revision; within 90 days, if the CLARITY Act advances to a vote, substantive changes to retail-facing stablecoin yield/cashback products in the US could actually materialize. Users holding basic payment-type USDT cards don’t need to take any action during this period.
Historical Comparison: How Does This Compare to the 2023 USDC Depeg and MiCAR’s E-Money Token Rules
The core demand of this banking industry push — “payment stablecoins must not pay interest” — isn’t new; it’s a long-standing thread in US and EU regulation.
- Similarity with the EU’s MiCAR: MiCAR, when legislated in 2023, explicitly stated that e-money tokens (EMTs, i.e., payment stablecoins) may not pay interest to holders. What US banks are essentially pushing for this time is writing MiCAR’s already-established “no-interest principle” into US federal law. The direction is consistent.
- The difference: MiCAR was regulator-led, top-down legislation, whereas this time it’s commercial banks actively lobbying, with a clear motive of “protecting their own deposit base.” So how tight the final clause ends up depends on the tug-of-war between bank lobbying and crypto industry counter-lobbying — the uncertainty is higher.
- Echoes of the March 2023 USDC depeg: That event exposed how deeply stablecoin reserves are tied to the traditional banking system (Circle’s deposits at Silicon Valley Bank). Banks now worrying about “deposits flowing into stablecoins” is the flip side of the same coin — the substitution relationship between stablecoins and bank deposits is exactly the boundary regulators keep trying to draw clearly.
Regulatory Boundaries: What’s Currently Gray Area, What’s Already Settled
For USDT card users, three lines matter:
- Clearly permitted: Using USDT as spending credit, settled instantly at point of sale. This is the “medium of exchange” use case accepted by mainstream regulators globally.
- Legal gray area: Stablecoin “cashback/rewards” — is it marketing incentive or disguised interest? This is exactly what the current CLARITY Act dispute is trying to clarify.
- Trending toward prohibition: Paying interest/yield directly on payment stablecoin balances is already explicitly banned in the EU, and the US is moving in the same direction.
US-based readers can refer to our US Compliance Guide for the current layered federal and state regulatory landscape. Note that this legislation targets stablecoin products issued within the US and aimed at US retail users; for holders of cards routed through Asia-Pacific or other offshore rails, direct legal constraints are limited, though issuers’ global compliance strategies could be indirectly affected.
Key Milestones Worth Watching
- Senate revision text: Watch whether the CLARITY Act provides clear definitions for the three terms — interest, yield, rewards — and whether “rewards” gets carved out separately.
- Crypto industry counter-lobbying: Whether Coinbase, Circle, and others publicly respond to the banking industry’s joint letter — their cashback/yield businesses are directly affected.
- Issuer announcements: Exchange-affiliated cards built around cashback typically publish policy-change notices 30 days in advance if they adjust US cashback rules.
- Latest interpretation of MiCAR implementing rules: The EU’s enforcement standard on “whether rewards constitute interest” often serves as a reference point for US legislation.
Editorial Recommendations
- Users who only use USDT cards for everyday spending: No action needed. This dispute doesn’t affect card-swipe payment functionality; basic credit-based products covered in our MPCard review remain within the safe boundary.
- US-based users who choose cards for cashback/yield: Hold off on treating “high cashback” as the sole reason to pick a card. Before the Senate revision lands, we recommend weighing more stable metrics like fees and FX costs — see our 2026 Lowest-Fee Card Comparison.
- Users planning to apply for new exchange-affiliated cashback cards: No need to panic about delisting, but a 30-day observation window is advisable — wait until the clause definitions are clearer before deciding whether the cashback rate is worth paying for.
- What not to do: Don’t panic-withdraw stablecoin balances or cancel cards over a single lobbying letter — no clause has taken effect yet, and no card’s functionality has changed.
We’ll continue tracking the CLARITY Act’s progress through Senate revisions and will update relevant card reviews if cashback rules undergo substantive changes.