The Clarity Act draws the line community bankers have sought. It prohibits passive, deposit-like interest paid solely for holding an idle stablecoin balance, which takes the savings-account lookalike off the table by statute. Here are five key things community bankers should know about the Clarity Act, and why its immediate passage is critical.
1. The Clarity Act recognizes the critical role community banks play throughout the U.S. economy.
Community banks make up 90% of all FDIC-insured institutions, and their local footprint far exceeds their share of industry deposits. They are a primary source of small business and agricultural credit in much of the country and the only bank presence in hundreds of U.S. counties. When Congress writes rules for digital dollars, protecting that funding base is a legitimate concern, and the Clarity Act takes this seriously.
2. There is a clear line between passive holdings and the real activity that would qualify a customer for rewards.
The Clarity Act prohibits digital asset service providers and their affiliates from paying rewards solely for holding an idle stablecoin balance. Community banks have expressed concern about a competing product that might look like a savings account and would offer interest like a savings account. The Clarity Act is a statutory safeguard that directly addresses this concern.
Rewards would be permitted only in connection with real activity, tied to something the user does:
- Transaction and payment activity: merchant rebates, conversion incentives, and rewards for remittances, transfers, and settlement.
- Liquidity and risk-taking: providing liquidity for market-making, posting collateral for trading, or placing assets at credit or investment risk.
- Ecosystem participation: protocol validation, network staking, and decentralized governance.
- Commercial loyalty programs: membership, subscription, and promotional programs that require substantive user activity.
Under the Clarity Act, rewards are analogous to a credit card rewards program or various consumer rebates, not a certificate of deposit.
3. Platforms must clearly disclose that payment stablecoins are not investment products or bank deposits.
The requirement that rewards be based on real activity is paired with strict truth-in-marketing requirements. Platforms must clearly disclose that payment stablecoins are not investment products or bank deposits, that they carry no FDIC or NCUA insurance, and that rewards are discretionary payments from the platform rather than yield from an account balance. For community banks, disclosure provides an affirmative benefit in highlighting an advantage that insured deposits have over stablecoins and other products like money market funds.
4. There is no evidence that stablecoins threaten community bank deposits.
Deposits have grown steadily throughout the stablecoin era, without a statistically significant relationship between stablecoin adoption and community bank funding. Under the GENIUS Act, digital asset businesses already pay stablecoin rewards — if this threatened community bank deposits, the evidence would show it, but it does not. In fact, the FDIC’s 2026 Risk Report found bank deposits grew about 3.9% in 2025, and community bank deposits grew faster, near 5%.
The White House Council of Economic Advisers found that eliminating stablecoin yield entirely would move lending by a rounding error: total lending up just 0.02%, community bank lending up just 0.026%.
The Clarity Act contains legislative safeguards that will ensure the continued security of community bank deposits, while also laying the groundwork for a world where smaller institutions can leverage digital asset technology to compete with their larger rivals.
5. Keeping activity onshore serves community banks.
Failure to pass market structure legislation will cede U.S. leadership over financial markets to other jurisdictions. 90% of global currency trades are based on USD, and U.S. equities make up 50% of worldwide market capitalization. But the crypto market is growing faster offshore: nearly 88% of centralized exchange volume is traded on non-US exchanges. The U.S. can either build a framework the leading firms can operate under, or watch them operate elsewhere. This is a competitiveness issue for the country, not just a policy preference for the industry, especially given only 19% of crypto developers are in the U.S., a 51% drop over the last decade. It is in the interest of the U.S. to keep businesses here and help businesses become more competitive—both dynamics contribute to the growth of the community banks that help serve them.
Clarity can safeguard community bank deposits, preserve the rewards that drive adoption of the rails they will use, require competitors to disclose that they are not insured banks, and codify clear rules of the road in order to prevent piecemeal regulation and regulatory ambiguity.
