The Independent Community Bankers of America (ICBA) released data this week that illustrates the economic impact of allowing crypto intermediaries to pay interest on payment stablecoin holdings.
ICBA estimates that continuing to allow crypto exchanges, affiliates, and intermediaries to pay interest or yield on payment stablecoin holdings would reduce community bank lending by $850 billion. This would be due to a $1.3 trillion reduction in the industry’s deposits. This would diminish access to credit and economic resilience for small businesses, consumers, and agriculture in local communities.
Currently, community banks hold $4.8 trillion in deposits that fuel $4 trillion in total lending activity. However, ICBA contends that a dramatic decline in community bank lending capacity would stifle small-business expansion and innovation, hurt job creation, and hinder economic growth.
These projections come amid Treasury estimates that stablecoins will grow from $300 billion to trillions of dollars by the end of the decade.
“The nation’s community banks have a proven commitment to keeping credit and banking services available to the nation’s local economies through good times and bad,” ICBA President and CEO Rebeca Romero Rainey said. “Our analysis shows that Congress must extend the prohibition on payment of yield and interest on payment stablecoin holdings to crypto exchanges, affiliates, and other intermediaries. The role community banks serve is too important to risk.”
ICBA officials pointed out that the GENIUS Act addressed the risks posed by yield-bearing payment stablecoins by prohibiting payment stablecoin issuers from offering yield, interest, or other considerations to payment stablecoin holders. ICBA will seek to work with Congress to extend this prohibition to crypto exchanges, affiliates, and other intermediaries.