ICBA urges policymakers to prohibit stablecoin issuers, affiliates, crypto exchanges, and other intermediaries from paying yield, interest, or rewards on stablecoins. Yield-bearing stablecoins risk drawing deposits away from community banks that sustain vital lending activities that support agriculture and small businesses. 

In order to protect stability and integrity of the financial system, the Federal Reserve must not expand eligibility for access to master accounts or the payment system. 

ICBA opposes granting trust charters to nonbanks that are not subject to the same regulation and supervision to which community banks are subject. Special purpose bank charters or similar alternatives should not be granted to digital asset entities that do not fully meet the requirements of federally insured and supervised chartered banks. 

The separation of banking and commerce must be preserved by ensuring commercial firms are not given the significant power of issuing private currency.  

ICBA is concerned about the potential development of state-issued stablecoins that could negatively impact deposits at community banks, thereby harming their ability to provide credit to their communities. If states create new forms of money or payment systems, the U.S. financial system could experience significant fragmentation, threatening financial stability. 

ICBA has serious concerns regarding threats posed by cryptocurrency to privacy and to consumers, and financial stability resulting from increases in money laundering, terrorist financing, and fraudulent activity. ICBA urges policymakers to ensure public trust by fostering collaboration between domestic and international regulatory authorities to mitigate risks as the adoption of cryptocurrency continues to increase.  

ICBA urges policymakers to ensure any regulatory frameworks contain strong, clear, and consistent oversight of cryptocurrency service providers and establish guidelines for any permissible activities by banks. 

ICBA believes most cryptoassets are likely offered and sold as unregistered securities. However, for those that are not deemed to be securities, policymakers should ensure regulatory frameworks are robust and recognize that many cryptoassets seek to replicate regulated activities and products of the traditional financial system. Any bank-like activities offered by crypto entities must be subject to the same rigorous regulations that community banks must follow. 

ICBA urges policymakers, regulators, law enforcement, and national security organizations to coordinate their efforts to combat ransomware and prevent bad actors from using cryptocurrencies for illicit activities and investment scams. 

ICBA encourages regulators to collaborate on a comprehensive approach to prevent the rise of decentralized finance (DeFi), a shadow banking system filled with unregulated, decentralized platforms that pose risks to consumers, the financial system, and U.S. national security. 

ICBA urges policymakers to engage with community banks as the Federal Reserve begins to explore new tokenization systems. Tokenized deposits may offer new capabilities to community banks, so it is essential for community banks to have an active role in efforts to evaluate these technologies.