Stablecoin Yield Ban Emerges as Key Issue in Crypto Legislation

The U.S. banking lobby’s top priority for 2026 is to stop stablecoin yields. The American Bankers Association (ABA) wants Congress to ban interest, rewards or even yield payments on payment stablecoins.

Banks argue that stablecoins offering yields act like unregulated bank deposits. They warn that this could pull trillions of dollars away from community banks. According to the ABA, this change can cause trouble when lending for mortgages, for small businesses and even local economies

Fear of Deposit Substitution

The ABA says payment stablecoins should not compete with bank deposits directly. Bank leaders say that yield-bearing stablecoins encourage the users to move money out of traditional banks. This could make the banking system weak, especially the smaller community banks.

In their point of view, banks play a key role in funding for housing loans and small business growth. Since losing deposits could lower their ability to lend. The lobby frames the issue as one of financial stability, and not innovation.

Pressure Builds Ahead of Midterms

This push comes at a time when the U.S. lawmakers are working on bigger crypto market structure rules. Moreover, the Congress aims to pass new rules before the November 2026 midterm elections. One of these proposals that is being discussed is the Clarity Act. Which aims to show how digital assets should be regulated.

The banking lobby sees this as a perfect way to confirm strict rules. By acting now, banks hope to change the future use of stablecoin in the U.S.

Thousands of Bankers Sign Letter

On January 14, 2026, more than 3,200 bankers signed a letter asking the Senate to take actions in a better way. The letter asks for changes that would extend stablecoin yield bans beyond issuers. It also targets crypto exchanges and affiliated platforms.

The bankers argue that allowing yields through indirect channels would make the law weak. Moreover, they stress the need for proper rules that keep consumers safe and reduce systemic risk.

A Growing Debate Over Stablecoin Innovation

Crypto supporters warn that banning stablecoin yields could make innovation slow down. They even argue that rewards help users to adopt digital payments and compete with traditional finance. Furthermore, the ones who critique the ban say that regulation should focus more on being transparent, instead of only limits.

The debate highlights a bigger clash between banks and crypto firms. As Congress moves closer to passing new laws, the future of stablecoin yields may become one of the most wanted issues in U.S. crypto policy.