As Congress crafts legislation to establish a regulatory framework for digital assets markets, the Independent Community Bankers of America (ICBA) today released new data showing the harmful impact on local economies of allowing crypto exchanges, affiliates, and other intermediaries to pay interest, yield, or rewards on payment stablecoin holdings.
Based on macroeconomic modeling from new industry research, ICBA estimates that continuing to allow crypto intermediaries to pay interest or yield on payment stablecoin holdings would reduce community bank lending by $850 billion due to a $1.3 trillion reduction in the industry’s deposits—significantly diminishing access to credit and economic resilience for small businesses, consumers, and agriculture in local communities. Today, community banks hold $4.8 trillion in deposits that fuel $4 trillion in total lending activity. A dramatic decline in community bank lending capacity would stifle small-business expansion and innovation, impair job creation, and hinder economic growth in communities across America.
ICBA is releasing these projections 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 today. “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.”
In addition to ICBA’s new data analysis, existing data show that community banks are vital partners to U.S. small businesses, farmers, and rural communities.
- Community banks hold a larger share opens in a new tab of small-business loans relative to regional and large banks.
- Small businesses are most likely opens in a new tab to be approved for most or all of their applications for credit at community banks.
- The majority of bank farm credit opens in a new tab is provided by community banks, accounting for 81% of farm real estate debt held by commercial banks and 74% of operating debt.
- Community banks are especially crucial to small-dollar farm loans opens in a new tab, accounting for almost 90% of commercial bank farmland loans with original amounts of $500,000 or less.
- Community bank branches represent over 71% of all bank branches in rural areas opens in a new tab and hold nearly two-thirds of rural deposits, in addition to accounting for more than 56% of total commercial bank branches in the 25 states with the largest rural population shares.
The GENIUS Act took the first step in addressing 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 looks forward to continuing to work with Congress to explicitly extend this prohibition to crypto exchanges, affiliates, and other intermediaries to enable community banks to continue powering local economies across the United States.
About ICBA
The Independent Community Bankers of America® has one mission: to create and promote an environment where community banks flourish. We power the potential of the nation’s community banks through effective advocacy, education, and innovation.
As local and trusted sources of credit, America’s community banks leverage their relationship-based business model and innovative offerings to channel deposits into the neighborhoods they serve, creating jobs, fostering economic prosperity, and fueling their customers’ financial goals and dreams. For more information, visit ICBA’s website at icba.org.