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Payment Stablecoins Could Significantly Reduce Community Bank Lending

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Local Lending is At Risk

Crypto Companies Offering Interest on Payment Stablecoins Could Drain Community Bank Deposits and Limit Credit Availability for Local Economies — Allowing digital asset entities to pay interest, yield, or “rewards” on payment stablecoin holdings would significantly reduce community banks’ ability to support local lending needs.

$1.3 Trillion 

In potential lost deposits 

$850 Billion 

Decline in lending activity 

As deposits shrink, community banks would have less lending capacity to power Main Street economies. America’s small businesses, farmers, ranchers, and rural communities stand to lose access to capital and credit if deposits are diverted from community banks to stablecoin holdings. Constrained credit availability would stifle innovation and small business expansion, reduce job creation, and hinder economic growth in communities across America.** 

Sources: FDIC Summary of Deposits; FFIEC Call Reports; Small Business Association; Whited, Wu & Xiao (2023); Nigrinis (2025). 

Community Banks Power Local Economies 

$4.8 Trillion

Total community bank deposits

$4 Trillion

Community bank lending activity to America’s communities 

60%  

of U.S. small-business loans under $1 million are made by community banks. 

80%  

of the banking industry’s agricultural lending is made by community banks. 

90%

of small-dollar farm loans are made by community banks.

Americans Agree: Crypto policy shouldn’t harm Community Bank Services to Local Communities.  

Community bank lending capacity is most negatively impacted if payment stablecoin holdings are permitted to earn yield, interest, or “rewards.” — Based on macroeconomic modeling from new industry research, ICBA estimates that the growth of the stablecoin market resulting from payment of yield or interest on stablecoins will significantly reduce community banks’ ability to support local lending needs. A $1.3 trillion reduction of the $4.8 trillion in total deposits held by community banks could result in an $850 billion decline in lending activity.

Source: Morning Consult and ICBA poll, June 2025 

66%

said maintaining bank lending to small businesses and homebuyers is important. 

65%

said sustaining consumer access to locally based community banks is important. 

66%

said preserving consumer access to insured deposit accounts is important.

America’s communities need local lending. 

Congress, say no to interest, yield, or “rewards” for payment stablecoins.

** Methodological Note: This research is based on comprehensive modeling laid out in “The Lending Impact of Stablecoin-Induced Deposit Outflows” by Andrew Nigrinis (2025) and “Will Central Bank Digital Currency Disintermediate Banks?” by Whited et al (2023). The researchers employ two market size projections: (1) $1.22 trillion, based on a scenario where stablecoin holders cannot collect interest on holdings directly or indirectly, and (2) $5.01 trillion, based on a scenario where stablecoin holders can collect interest at the federal funds rate. These market size estimates are applied to a macroeconomic model that estimates subsequent deposit and lending losses for each scenario. ICBA applied this methodology to state deposit and lending estimates using data from FDIC, FFIEC, SBA, and CRA.