The Independent Community Bankers of America is urging Congress to ensure legislation will prohibit digital asset exchanges and affiliates from paying interest or yield payments on stablecoins.
ICBA said community banks provide 60 percent of U.S. small-business loans under $1 million and provide nearly 80 percent of the bank industry’s agricultural lending. Ensuring crypto exchanges from offering rewards to stablecoin holders would prevent businesses from switching to less regulated funding sources.
“Preserving needed credit for local communities must be the top priority as the Senate considers digital assets market structure legislation,” ICBA President and CEO Rebeca Romero Rainey said. “Prohibiting crypto exchanges and affiliates from offering interest, yield, or rewards on payment stablecoins — as the GENIUS Act does for payment stablecoin issuers under its purview — will maintain the intended purpose of stablecoins for payments and help avoid a flight of FDIC-insured domestic deposits to global crypto conglomerates that do not have the same regulatory oversight or local commitment as community banks. This is a critical guardrail needed to preserve access to credit in Main Street communities and keep funding in the real economy to sustain growth.”
According to the Treasury Borrowing Advisory Committee and the Federal Reserve Bank of Kansas City, digital assets pose a significant threat to deposits that banks use to fund U.S. business lending and could impair credit availability in communities across the country. Crypto exchanges, the banking organizations said, are actively working to replace community banks, and doing so would disrupt a critical source of credit for local communities.