One of the most consequential policy debates playing out in Washington right now centers on stablecoins, and its outcome will have real implications for how community banks operate in the years ahead. I want to take a few minutes to walk you through where things stand, what the data tells us and what we can do about it.
The GENIUS Act, signed into law last July, was a meaningful first step. It requires stablecoin issuers to maintain one-to-one reserves and prohibits them from paying interest or yield to holders, a recognition that stablecoins should function as payment tools, not as substitutes for bank deposits. Those provisions reflected a principle we have long advocated for: The rules of the road should be the same for everyone competing for the same customers.
However, gaps remain. While issuers themselves are barred from offering interest, affiliated exchanges and digital platforms have introduced “rewards” and yield programs tied to stablecoin holdings that function much like interest-bearing accounts. What Congress prohibited directly is now happening indirectly through intermediaries.
The scale of this trend deserves our attention. The stablecoin market grew 49% in 2025, reaching over $312 billion, and the U.S. Treasury estimates stablecoins could displace up to $6.6 trillion in deposits if yield incentives continue to expand. ICBA’s analysis suggests that allowing crypto intermediaries to pay interest on payment stablecoins could reduce community bank lending by $850 billion due to a $1.3 trillion reduction in industry deposits. A recent study of 92 community banks found that nine out of 10 already have customers transacting with platforms like Coinbase, and for every dollar that came back, $2.77 left. These are not abstract projections. They reflect the movement of real dollars out of our communities.
For Nebraska, the implications are especially significant. Community banks make 80% of agricultural loans within the banking sector and 60% of small business loans under $1 million. Our banks are the primary source of credit for the farmers, ranchers and small business owners who drive this state’s economy. When deposits migrate to digital platforms, those dollars are far less likely to return as loans for Nebraska families, farmers and businesses. The relationship between local deposits and local lending is the foundation of what we do, and it is exactly what is at risk.
The conversation has now shifted to the CLARITY Act, which passed the House last July with a 294-134 vote and moved toward a Senate Banking Committee markup in April. A key question is whether Congress will close the yield loophole the GENIUS Act left open. A reported compromise would prohibit passive yields for simply holding stablecoins while permitting incentives tied to actual payment activity. That’s a step in the right direction, but the final language will matter enormously. We have seen before how well-intentioned legislation can be undermined by vague definitions and narrow enforcement mechanisms.
It is also worth noting that the FDIC has issued proposed rulemaking under the GENIUS Act to establish a prudential framework for stablecoin issuers, with comments due by June 9. I would encourage any bank with the capacity to review and weigh in on this proposal. Regulatory comment periods are one of the most direct ways we can shape how these rules are implemented on the ground.
I want to be clear: Innovation is essential to our industry’s long-term competitiveness, and there may be legitimate opportunities for community banks in the digital assets space, particularly through fintech partnerships and modernized payment infrastructure. But fair competition requires fair regulation. Community banks should not be placed at a structural disadvantage against entities that are not subject to the same supervisory standards we operate under every day.
What matters most right now is that Congress ensures stablecoin companies and big tech firms cannot draw deposits away from community banks by offering interest, rewards or rebates, whether directly or through affiliates. Without deposits, community banks simply cannot offer the volume of agriculture, small business and mortgage loans that sustain Nebraska’s economy. It is that straightforward.
NICB will continue working alongside ICBA and our Nebraska delegation to ensure community banks have a seat at the table as these rules take shape. This is a moment that calls for engagement, not from a place of fear, but from a position of confidence in the value we provide to our communities. I encourage you to make your voice heard.
