The American Bankers Association is making a last-minute push against crypto market structure legislation set for a Senate Banking Committee markup Thursday, warning that the bill does not go far enough in restricting stablecoin rewards.
ABA CEO Rob Nichols sent a letter to bank executives Sunday night calling it an “urgent advocacy fight that requires your immediate engagement.”
The core dispute
At the heart of the conflict is whether crypto platforms like Coinbase can offer yield-like rewards to customers who hold stablecoins.
Banking groups argue such incentives could pull deposits away from traditional banks — particularly community institutions — and into stablecoins, threatening financial stability.
Nichols stated in the letter:
“Without additional changes, we believe the current proposal would unnecessarily incentivize the flight of bank deposits into payment stablecoins, putting both economic growth and financial stability at risk.”
Crypto firms, meanwhile, have applauded the compromise language released May 2 by Sens. Angela Alsobrooks, D-Md., and Thom Tillis, R-N.C., which blocks yield payments on stablecoins but carves out exceptions for “activity-based or transaction-based rewards” tied to bona fide activities.
A long road ahead
Even if the bill clears committee, it faces a steep path to becoming law.
It would need 60 votes to pass the full Senate, then clear the House Financial Services Committee and the full House before any differences between chambers are reconciled.
TD Cowen analyst Jaret Seiberg noted:
“We expect the bill will pass committee if there is a vote. That will simply punt to the full Senate the need to find compromise language that can secure the 60 votes needed for the measure to advance.”
Banks vs. the crypto lobby
The fight has pitted traditional banking groups against a crypto lobby that outspent the banking industry in the last election cycle and is already planning larger outlays ahead of the 2026 midterms.
Senate Banking Committee Chairman Tim Scott, R-S.C., who also chairs the National Republican Senatorial Committee, has a political incentive to advance the bill as Republicans look to defend their Senate majority.
Analyst Ed Groshans of Compass Point described the banks’ last-minute push to tighten the bill’s language as “an interesting last minute audible, given that banks have worked towards and supported the economically equivalent language for months.”
