The evidence doesn't support the banks' case against stablecoin rewards

Rob Nichols says the American Bankers Association wants to strengthen the Clarity Act, not kill it, and that the fix is a handful of word changes in a 600-page bill. I take him at his word on intent. But the changes are not small, and the premise behind them has been tested against seven years of data and did not survive.

The ABA’s case rests on a prediction: let platforms pay stablecoin rewards and deposits will drain out of community banks, taking local lending with them. That has been testable for years, because current law already permits these rewards, and Coinbase has paid them on USDC for more than four years. If the mechanism worked as the ABA describes, the damage would be visible.

It isn’t. Community bank deposits grew 26 percent, roughly $482 billion, from June 2019 through March 2026, straight through the entire rise of stablecoins and stablecoin rewards.

Faryar Shirzad is chief policy officer at Coinbase.

The empirical evidence points one direction

Empirical studies from Charles River Associates and the Council of Economic Advisors also show no significant relationship between stablecoins and deposits. Rob calls the absence of deposit flight since GENIUS “irrelevant” because regulators haven’t finished their rules. That asks Congress to legislate against a future harm no one can measure while ignoring the record we’ve already spent years with. Money market funds, Treasury bills, and brokered CDs have out-yielded checking accounts for years without emptying them.

Banks understand exactly what rewards do

Consumers earned nearly $50 billion in credit card rewards last year, and more than 90 percent of general-purpose card spending runs on cards that offer them. The banking industry built that. Rewards are how you get consumers to adopt a product and then use it.

Rob says plenty of reward programs would survive his suggested language, just not ones that mimic interest. But credit cards are principally a retail payments product, so transaction-based rewards fit them naturally. Stablecoins do far more: they move payments, settle trades, post collateral, and serve as the cash leg of the onchain economy, and in much of that activity holding a balance is integral to what is being rewarded. Forcing stablecoin incentives into the card template is not neutrality, it is a constraint on a competitor just as onchain finance proves itself.

The word changes are not technical

The current text is not loose drafting. Senators Tillis and Alsobrooks negotiated it over months with the banks at the table, and every phrase the ABA wants to revisit was settled there. It draws a deliberate line: a return for leaving money idle is prohibited, compensation for genuine activity is not.

The ABA’s edits would move that line, widening the prohibition past deposit substitutes into ordinary stablecoin use mechanics and leaving regulators and litigants to sort out whether a routine merchant rebate is really bank interest. Reopening a negotiated compromise this late, in language broader than the goal requires, is not a technical correction. Let’s take the compromise.