Who Is Who in the Banks vs. Stablecoin-Yield Battle

The stablecoin debate is no longer primarily about crypto. It is about banking power. And if the back-and-forth over the weekend between Coinbase and JPMorgan Chase is any indication, it may not even be much of a debate anymore.

Asked about the CLARITY Act on Friday (May 29), Jamie Dimon said on Fox Business that he is not happy with it. His concern: the bill effectively allows digital asset companies to pay interest on deposits such as stablecoins without the required protections or AML/BSA requirements.

“We’ll fight it. If we lose, we lose, and we’ll live. But it will be fought,” the JPMorgan CEO said, adding a few pointed words for the crypto sector’s political hardliners.

JPMorgan is not alone. Traditional banking groups, community banks, federal regulators, lawmakers and financial stability advocates are converging around a shared concern. They argue that stablecoins could replicate core banking functions without equivalent obligations.

Bitcoin has slid amid growing uncertainty about the bill’s prospects. The decline reflects investor concern that Washington’s crypto-friendly momentum may be slowing just as institutional adoption appeared ready to accelerate.

The digital asset industry, however, sees the situation differently.

See more: Two Years Ago vs Today: Looking at Crypto Regulation in the US

Why the Banking Industry Is Pushing Back Against Crypto Charters and Stablecoin Rules

The Independent Community Bankers of America (ICBA) has emerged as one of the clearest institutional opponents of crypto firms gaining deeper access to the banking system. On May 21, the ICBA sent a letter urging the Office of the Comptroller of the Currency (OCC) to rescind Coinbase’s conditional approval for a national trust bank charter.

The organization pointed to New York Attorney General Letitia James’ lawsuit against Coinbase and Gemini. The suit alleges the companies operated an illegal gambling enterprise connected to crypto lending activities. The ICBA argued those allegations warrant rescinding or suspending Coinbase’s preliminary charter approval until the legal issues are resolved.

Community banks view the issue through a defensive lens. Unlike megabanks with diversified revenue streams, smaller banks depend heavily on deposit relationships and payment infrastructure. Yield-bearing payment stablecoins are not merely speculative crypto products to them. They are direct competitors to core banking services.

Sen. Elizabeth Warren, D-Mass., long viewed as one of Wall Street’s fiercest critics, now finds herself broadly aligned with bank lobbying groups including the ICBA and the Bank Policy Institute on portions of crypto policy. Their motivations differ, but both camps argue that allowing stablecoin issuers to operate quasi-bank functions without equivalent oversight introduces systemic risk.

Warren wrote in a May 18 letter to OCC Comptroller Jonathan Gould:

“You have approved at least nine national trust charters for crypto companies that intend to engage in activities that appear to go far beyond the narrow set of activities permitted by law. These companies are effectively crypto banks that want to evade the fundamental safeguards and obligations that come with being a bank. Your decision to facilitate this regulatory arbitrage not only conflicts with federal law, it also poses serious risks to consumers, the safety and soundness of the banking system, and the separation of banking and commerce.”

See also: A Stablecoin History Lesson: The Messy Origins of the Internet’s ‘Digital Dollar’

How the Crypto Industry Is Responding to Banking Sector Opposition

The PYMNTS Intelligence and Citi report “Chain Reaction: Regulatory Clarity as the Catalyst for Blockchain Adoption” found that regulation will shape blockchain’s next leap. The CLARITY Act could be one of the biggest drivers of that shift.

To crypto advocates, the CLARITY Act represents overdue regulatory modernization rather than deregulation. Industry leaders argue that the existing patchwork of federal and state oversight has created uncertainty. That uncertainty, they contend, disadvantages U.S. firms and drives innovation offshore.

PYMNTS reported May 25 that the CLARITY Act passed a key markup vote on May 14. Even so, the digital asset bill’s path to passage is far from guaranteed. At its core, the dispute between banks and crypto centers on whether digital financial infrastructure will remain concentrated within regulated incumbent institutions or migrate toward more open, software-driven networks.

In a recent letter defending national trust bank charters for crypto firms, The Digital Chamber argued that companies receiving OCC approvals underwent extensive review and satisfied applicable statutory and regulatory standards. The organization describes itself as the world’s largest digital asset and blockchain trade association.

For firms like Coinbase, the stakes are high. Yield products have been a key revenue differentiator, especially during periods of low trading volume. Removing that lever could compress margins and push platforms toward more diversified, utility-driven revenue streams.

Still, when the CEO of America’s largest bank publicly attacks crypto legislation and major banking organizations intensify lobbying against charter approvals, it is hard not to read it as powerful incumbents mobilizing to protect their interests.

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