Citigroup CEO Jane Fraser has voiced support for the CLARITY Act while continuing to push for changes to its stablecoin reward provisions, highlighting one of the biggest remaining points of disagreement between the banking and crypto industries.
Speaking on Thursday, Fraser said she would like to see improvements made to the legislation but believes a workable version of the bill should move forward because it could benefit the broader financial system.
Her main concern focuses on stablecoin reward programs and their potential impact on bank deposits. Fraser warned that if crypto platforms are allowed to offer rewards tied to stablecoins, some customers could move money out of traditional bank accounts and into digital assets.
According to Fraser, a reduction in bank deposits could affect the ability of financial institutions, particularly smaller and community banks, to provide loans and credit to households and businesses.
The debate centers on whether crypto companies should be allowed to offer rewards related to stablecoin holdings. Current regulations already prevent stablecoin issuers from directly paying interest to users. However, some crypto platforms have developed separate reward programs that provide benefits to customers through other mechanisms.
To address the issue, lawmakers have proposed a compromise that would prohibit rewards simply for holding stablecoins while still allowing incentives tied to transactions, payments, and other forms of platform activity.
Supporters of the compromise argue that it strikes a balance between encouraging innovation and preventing stablecoins from functioning like traditional interest-bearing bank accounts. However, many banking groups remain concerned that certain reward structures could still attract deposits away from the banking system.
Crypto companies, on the other hand, argue that activity-based rewards are an important part of user engagement and should not be treated the same as interest payments.
The disagreement over stablecoin rewards has become one of the most closely watched issues surrounding the CLARITY Act as lawmakers work toward a Senate vote expected next month.
While some banking leaders have strongly opposed the legislation in its current form, Fraser’s comments suggest Citigroup is taking a more supportive approach, backing the overall bill while seeking targeted changes to its stablecoin provisions.
The next major step for the legislation is expected in September, when the Senate is scheduled to hold a procedural vote that could determine whether the bill moves closer to becoming law.
