The American Bankers Association calls for tightening stablecoin reward restrictions, and the Senate committee will vote on cryptocurrency legislation on Thursday

According to The Block, Rob Nichols, the CEO of the American Bankers Association (ABA), sent a letter to bank executives on Sunday evening urging them to contact senators to further tighten the provisions related to stablecoin rewards before the Senate Banking Committee's markup vote on Thursday.

Nichols warned that the current draft fails to effectively prevent crypto companies from offering "interest-like rewards" to users, which could lead to significant outflows of bank deposits, threatening economic growth and financial stability.

The current draft, negotiated by Senators Angela Alsobrooks and Thom Tillis, prohibits paying interest or returns to users holding stablecoins but allows rewards linked to real activities or transactions, a provision that has received support from Coinbase. The banking industry groups believe that the related exceptions contain loopholes that could be exploited and jointly sent a letter on May 8 to Committee Chairman Tim Scott and Democrat Elizabeth Warren, requesting technical revisions to the wording of the provisions.