We oppose provisions of the CLARITY Act and the Responsible Financial Innovation Act of 2025 that would preempt state level consumer financial protections and lead to a dramatic reduction in lending by traditional banks.
Recent actions taken by the Department of Government Efficiency to weaken federal agencies have left much of the task of protecting consumers’ financial well-being in the hands of state financial regulatory agencies. In this context, the CLARITY Act’s provisions prohibiting states from proactively identifying and mitigating digital asset fraud is a reckless move that will cost consumers untold millions of dollars in losses.
We are equally concerned about the dramatic reduction in lending by traditional banks that would result from the loophole allowing digital asset exchanges to provide a yield on digital asset holdings, either through interest or “rewards.” This would incentivize consumers to move their savings from bank accounts to stablecoin platforms, draining trillions from insured bank deposits that are a primary source of low-cost capital for banks to fund loans for small businesses, affordable housing, and agriculture.
We propose that the CLARITY Act be amended to include provisions that expand the scope of the Federal Deposit Insurance Corporation’s Deposit Insurance Fund to include stablecoin deposits that provide a yield (interest or reward), and that the digital asset platforms that provide these depository services be required to comply with the Community Reinvestment Act similar to limited purpose and wholesale financial institutions.
