How Stablecoins Could Drain Community Bank Deposits
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.
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.