Citigroup CEO Fraser on Clarity Act: 'We would like to see a good bill go through,' as stablecoin reward issues simmer

Citigroup CEO Jane Fraser says she would like to see landmark cryptocurrency legislation passed into law, even as she and others continue to fight for changes, as the debate over how to treat stablecoin yields simmers ahead of a procedural vote next month on the bill.

On Thursday morning in an interview with Fox Business, Fraser said that while she is worried about the bill’s treatment of stablecoin rewards, she believes legislation would be beneficial overall.

"So, we have not given up on pushing to get some improvements made to the bill, but we would like to see a good bill go through," Fraser said. "I think it would be excellent for the system."

The issue around stablecoin rewards — which allow users to earn interest on deposited funds — has resurfaced repeatedly over the past year in bill negotiations. Banks have warned that rewards will draw deposits away from traditional banks, while crypto firms say that restricting those rewards would hamper innovation — setting up a clash between two big players now in Washington.

The issue was seemingly resolved after Sens. Angela Alsobrooks, D-Md., and Thom Tillis, R-N.C., finalized a compromise in the bill, called the Clarity Act, that says platforms cannot pay rewards just for holding the asset, but said rewards could be given on transactions and payments.

Fraser, however, said she remains concerned about the potential impact on deposits.

"If you are having a reward system on deposits, it could have a detrimental impact on their deposits, and therefore their ability to provide lending and access to credit in parts of the U.S. that crypto won’t reach, and frankly, the large banks don’t reach," Fraser said. "So, I am worried about it from that perspective."

Others take hard line

Other bank leaders, such as JPMorgan Chase CEO Jamie Dimon, have taken a hard line against Clarity. In May, Dimon said he was unhappy with how the Clarity Act was written and blasted Coinbase CEO Brian Armstrong as "full of sh–," in an interview with Fox Business.

Blockchain Association CEO Summer Mersinger said the issue could be spotlighted when the bill goes back to the House for a vote, if it passes the Senate.

There was no discussion of yield in the Clarity Act on the House side," she told The Block. Still, progress in the Senate could help move the legislation forward.

Some Republican senators, who have historically backed banks, now face a choice between crypto and banks. Utah Sen. John Curtis said he likes crypto but also likes his banks, while South Dakota Sen. Mike Rounds alluded to his ties to the banking industry, according to Politico's reporting.