Bad information about stablecoin rewards is running rampant

• Key insight: Parties trying to restrict stablecoin rewards have been relying on a trio of false claims that, despite public debunking, continue to be spread.
• Supporting data: Recent data from the FDIC indicates community loans have increased over the last year by 5.1%.
• Forward look: Banking trade groups should stop asking community banks to repeat and defend bad claims and start helping them seize the opportunity in front of them.

For months, parties have debated the CLARITY Actʼs stablecoin rewards provisions on this page and in other venues. We have noticed several rewards-related claims circulating that have been examined and dismissed, yet continue to make their way into talking points. These claims have understandably caused fear among community banks. At some point continued use of bad or misleading information starts to look intentional, at least on the parts of the trade groups who leave the talking points in place. So I would like to clear up three myths and end on a note of opportunity for the U.S. and its smallest banks.

First, the Treasury Department never warned about a $6.6 trillion hit to bank deposits.

As recently as last month in an Idaho newspaper, a community banker wrote that the Treasury had previously warned that as much as $6.6 trillion dollars in bank deposits could be at risk from stablecoins. This claim has been repeated innumerable times and will be again. Treasury never issued such a warning, and that myth was corrected over a year ago. That $6.6 trillion number came from a slide deck published by the Treasury Borrowing Activities Committee, or TBAC — an advisory committee made up of large banks and other Wall Street firms. The $6.6 trillion was not a forecast of deposit flight; it was at the time the entire collective balance held in U.S. transaction accounts. No rational observer expects that Americans would completely empty out their transaction accounts to buy stablecoins, because they are not interchangeable products. This was never a serious forecast, and it was never a warning from the Treasury. Most multi-year stablecoin adoption estimates are in the $2 to $3 trillion range, with significant demand coming from overseas. This makes the repeated use of the $6.6 trillion deposit flight number particularly ridiculous and disingenuous.

Second, rewards on stablecoins do not lead to bank deposit displacement.

A central claim of bank trade groups is that stablecoins with rewards will drain deposits from community banks and affect Main Street lending. The empirical evidence shows healthy coexistence. Community bank deposits have grown 26% ($491 billion) over the seven-year period ending June 2026. Even more notable is recent data from the FDIC showing 4.6% (or slightly over $100 billion) in growth of community bank deposits since the GENIUS Act passed a year ago. That's above average compared to recent years. In fact, we are also seeing community bank lending go up over the same period. Recent data from the FDIC indicates community loans have increased over the last year by 5.1%. Rewards have been paid for years. There are reasons why people might prefer a banking relationship — and that competitive advantage is what will keep the community banking sector strong as innovation and technology drive cheaper, faster transactions.

Third, CLARITY restricts rewards just like the banks wanted.

The GENIUS Act permits platforms to pay rewards associated with stablecoin holdings. This was not a loophole; it was where GENIUS landed with all parties at the table. CLARITY would narrow the terms for paying rewards. Under the compromise negotiated by Senators Tillis and Alsobrooks, a platform like Coinbase could not pay yield merely because a customer holds a stablecoin balance. That is the deposit-like product the banks say they fear, and the bill prohibits it half a dozen different ways.

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While the compromise preserves compensation tied to activity like payments, commerce, and customer acquisition, it makes clear there's no evading the prohibition on payments that are functionally or economically equivalent to interest on a deposit. After months of lobbying and sitting at a negotiating table in the White House, banks are now saying anti-evasion language, strict definitions, penalties, marketing prohibitions, comprehensive rulemaking and extensive studies are not enough. They want additional changes that would all but ban rewards.

These are not small, technical changes. They will cut off rewards for millions earning them today. Let's be clear, banks know the value of rewards — they paid consumers nearly $50 billion dollars in credit card rewards in 2025, and these have been hugely successful in driving card adoption. It's important to be clear about the banking lobby's motivations. This is competition for adopting better, faster, cheaper ways to move value. And keep in mind, rejecting CLARITY now means no new restrictions at all — the status quo is rewards can and will be paid under GENIUS.

CLARITY should protect the opportunities GENIUS created.

GENIUS created a safe digital dollar that moves instantly, settles around the clock, and extends the reach of American financial leadership. CLARITY should not be used to eviscerate that vision. Changes that make stablecoins less attractive to end-users would undermine practical adoption and prevent needed competition. Community banks should want to get this right. A bank like JPMorgan Chase has a $20 billion dollar annual technology budget, and it has spent billions building and adopting blockchain-based tools. A $500 million community bank has about $4 million to spend. An ideal way to compete is using public blockchains and the stablecoins operating on them. Community banks now have the opportunity to leverage shared infrastructure—using some of their most trusted partners—in order to move money globally just as fast as any "too big to failˮ institution, and meet the new generation of Americans who want digital money at their fingertips anywhere, anytime. This capability, matched with the personal service community banks are known for, creates a powerful combination. CLARITY gives community banks the tools they need to compete in the next generation financial system. Letʼs not make stablecoins less useful before everyone gets a chance to put them to work.