Wall Street and Silicon Valley are embroiled in a legislative slugfest over which business interests will get to fleece more of their customers’ money.
A loophole under current law allows stablecoins — crypto tokens pegged to the US dollar — to essentially pay interest on their investors’ holdings, similar to a bank account except without the same regulatory guardrails.
This carve-out could lure depositors away from banks’ savings accounts — a move that would threaten a multitrillion-dollar scheme by the banking industry in recent years, in which they’ve paid minuscule interest on customers’ financial deposits while enjoying far higher interest rates from the country’s central bank and pocketing the difference.
Now banks have launched a last-minute lobbying offensive to protect their margins and avoid competition by preventing crypto from copying their business model. They’re trying to insert new language related to the loophole into a piece of stablecoin legislation, known as the Clarity Act, which the crypto industry had been backing for months.
In its last reported lobbying filing of 2025, the American Bankers Association, the main trade group representing the banking sector, spent more than $2 million on lobbying, including on the Clarity Act.
The group sent a letter to the Senate on January 13 threatening that the interest-rate loophole put trillions of dollars worth of bank deposits at risk. Last week, lawmakers granted the bank lobby’s wishes and inserted a provision that would partially limit crypto issuers’ ability to pay out interest. The crypto industry subsequently walked away from the deal, derailing negotiations.
Neither the American Bankers Association nor the Blockchain Association responded to a request for comment from the Lever on Tuesday.
Since the Federal Reserve started hiking interest rates in 2022, in part to address spiraling inflation since the beginning of the pandemic, the country’s biggest banks have…
Auteur: Katya Schwenk
