American Bankers Association pushes for stablecoin restrictions amid deposit concerns

Aug 25, 2026

The American Bankers Association is lobbying US regulators and lawmakers to restrict stablecoin rewards and mandate strict customer identification rules, arguing these digital assets threaten community bank deposits. However, empirical data from the White House Council of Economic Advisers and Charles River Associates shows no significant deposit drain, with community bank deposits growing 26% ($482 billion) from 2019 to 2026. While the banking lobby pushes to close third-party reward channels in the CLARITY Act and require formal account-opening for all direct redemptions, the Blockchain Association is fighting to preserve flexible, one-off cash-out options.

Stablecoin issuer customer identification requirements

▪The June 2026 federal proposal leaves unresolved whether a direct redemption of stablecoins by a holder with no prior issuer relationship constitutes opening an account.
▪A separate April 2026 federal proposal addresses broader anti-money laundering and countering the financing of terrorism programs for stablecoin issuers, including transaction monitoring and sanctions screening.
▪A joint federal proposal issued in June 2026 would require permitted payment stablecoin issuers to operate a Customer Identification Program (CIP) for customers who open accounts.

ABA redemption account mandate

▪The American Bankers Association argued that secondary-market stablecoin service providers, such as exchanges, should face customer-identification regulations and examinations equivalent to conventional financial channels.
▪The American Bankers Association submitted an August 21, 2026 letter recommending that anyone buying or redeeming a payment stablecoin directly with its issuer must first open an account and undergo the issuer's Customer Identification Program.

Blockchain Association redemption flexibility

▪The Blockchain Association proposed that when a regulated intermediary presents stablecoins for redemption, that intermediary—rather than its downstream users—should be treated as the issuer's customer.
▪The Blockchain Association submitted an August 24, 2026 comment agreeing that direct primary-market account customers should undergo issuer Customer Identification Programs, but urged regulators to preserve an issuer's option to conduct one-off redemptions for non-account holders.

Community bank deposit growth data

▪Empirical studies by Charles River Associates and the White House Council of Economic Advisers found no statistically significant relationship between stablecoin activity and declines in traditional bank deposits.
▪A White House Council of Economic Advisers analysis modeled that banning stablecoin rewards would increase traditional lending by 0.02% (about $2.1 billion), with the flow predominantly benefiting larger banks rather than community banks.
▪Community bank deposits grew by approximately $482 billion, or 26 percent, from June 2019 through March 2026, a period coinciding with the rise of stablecoins and stablecoin rewards.

Stablecoin rewards regulatory debate

▪The GENIUS Act, which took effect on July 18, 2025, prohibits stablecoin issuers from paying interest or yields on their tokens, but permits third-party platforms to offer rewards as marketing incentives.
▪Coinbase Chief Policy Officer Faryar Shirzad defended third-party stablecoin rewards, noting that Coinbase has offered rewards on USD Coin (USDC) holdings for over four years without causing deposit flight from community banks.

CLARITY Act legislative negotiations

▪The American Bankers Association is lobbying to amend the CLARITY Act to restrict third-party stablecoin rewards, arguing that such rewards mimic interest and will drain deposits from community banks.
▪The current draft of the CLARITY Act, negotiated over months by Senators Tillis and Alsobrooks, prohibits returns for leaving money idle but permits compensation for genuine transaction activity.