The digital asset landscape is changing quickly due to policy changes, market growth, and new entrants into the financial system.

Three related developments stand out, and together they could signal a major structural shift in the financial system: 

• Movement of deposits out of banks 

• Reduced capacity for community lending 

• Increased reliance on entities that do not provide credit to local economies 

At the same time, global adoption of digital assets is growing, along with fraud, cybersecurity threats, and regulatory uncertainty, making this a critical moment for policy alignment and industry engagement. 

 

Stablecoins as a New Payment Mechanism 

Stablecoins are digital tokens designed to maintain a stable value and are gaining traction as a new form of digital payment. Policymakers are developing regulations to support their growing role in the financial system. 

While stablecoins may enhance payment speed and efficiency, they also raise important questions: 

• Will they function like deposits? 

• Could they draw funds away from community banks? 

Research cited by ICBA indicates that large-scale growth in stablecoins could lead to up to $1.3 trillion in deposit outflows from community banks, resulting in a potential $850 billion decline in lending nationwide. 

 

Expansion of Nonbank Access to Core Financial Infrastructure 

Recent policy developments have explored expanding access to Federal Reserve master accounts beyond traditional banks. For example, Kraken, a crypto-focused institution, received limited access, signaling a potential shift in how nonbank financial firms interact with the central banking system.  

This raises fundamental questions about: 

• Equal regulatory treatment 

• Systemic risk 

• The role of banks versus nonbank entities in payments 

 

Growth of Crypto-Focused Charters 

The Office of the Comptroller of the Currency (OCC) has expanded the role of national trust charters, allowing certain crypto firms to custody digital assets and facilitate stablecoin issuance. 

These firms do not take deposits or make loans and are not FDIC-insured, yet they may still compete with banks for customer funds. More than a dozen crypto-related companies have pursued or received these charters, accelerating competition between regulated banks and less-regulated digital asset providers.  

 

Rising Crime 

Digital assets are increasingly tied to fraud and financial crime. In 2025 alone: 

• Cryptocurrency-related complaints reached over 181,000 cases, with more than $11.3 billion in losses. 

• Crypto was associated with $11.36 billion in total fraud losses, making it a major channel for cyber-enabled crime.  

• Investment scams involving crypto accounted for $7.2 billion in losses, the largest category of fraud. 

For community banks, this creates a dual responsibility: Protecting customers from emerging risks and navigating strategic engagement with new technologies.