January 6, 2026

ABA: Community Bank Leaders Urge Senate to Protect Local Lending from Stablecoin Risks

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  4. ABA: Community Bank Leaders Urge Senate to Protect Local Lending from Stablecoin Risks

The American Bankers Association’s Community Bankers Council, representing community banks across all 50 states and territories, is urging the U.S. Senate to take decisive action to protect local economies from emerging risks in the digital asset market.

In a letter sent to Senators, more than 200 community bank leaders from across the country expressed concern that some crypto companies are exploiting a regulatory loophole, undermining the intent of the GENIUS Act, which was designed to bring stablecoins under regulatory oversight and prevent disruptions to traditional banking. 

While the law prohibits stablecoin issuers from paying interest—a safeguard to ensure that deposits remain in banks and continue funding loans for families, farmers and small businesses—some companies are circumventing clear Congressional intent through indirect payments via affiliates and partners.

“Community banks are the backbone of local economies,” the letter states. “Allowing inducements like interest or rewards on stablecoins could incentivize customers to move savings out of banks, jeopardizing the lending that fuels growth in towns across America.”

The letter warns that without stronger legislative clarity, up to $6.6 trillion in deposits could be at risk, threatening the availability of credit for households and businesses nationwide. A detailed state-by-state analysis of potential deposit outflows and lost lending accompanies the letter.

ABA’s Community Bankers Council is calling on Congress to make clear in upcoming market structure legislation that the prohibition on interest applies not only to stablecoin issuers but also to their affiliates and partners. “Anything less will put economic growth and local communities at risk,” the letter concludes.

The full letter is available here: https://www.aba.com/advocacy/policy-analysis/Letter-to-the-Senate-on-the-Stablecoin-Market. 

Background:
Below is a selection of some of ABA’s recent advocacy efforts on stablecoin regulation: 

This post was originally published here.
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