- Key insight: The claim that community bankers are somehow being manipulated into supporting changes to the CLARITY Act that would benefit big banks is wrong. The threat to deposits from stablecoin yield is real and dangerous.
- What's at stake: If consumers and businesses are encouraged to move their money from bank deposits into stablecoins that offer interest-like rewards, those funds will no longer support local lending in the same way.
- Forward look: Congress should tighten the Clarity Act's language governing stablecoin incentives to ensure that payment stablecoins remain payment instruments — not lightly regulated substitutes for bank deposits.
I grew up in a small town in Alabama. The people who helped me open my first bank account and gave me my first loan showed early on what a
As the chairman and CEO of a Detroit-based community bank — and as the current chair of the American Bankers Association — I know that thousands of community bankers across the country make difficult decisions every day on credit, liquidity, risk, and capital deployment.
That perspective is why I reject J.W. Verret's characterization of community banks as a "stalking horse" in the Clarity Act debate (
Congress should tighten the Clarity Act's
As ABA chair, I have traveled across the country and spoken with bankers representing institutions of every size and business model. I have urged them to carefully examine the stablecoin provisions and to communicate their concerns to elected officials. Their engagement has not been orchestrated by a handful of large banks; it reflects the independent judgment of bankers who understand how deposits support lending in their own communities.
This is not blanket opposition to digital assets. My bank serves customers in the fintech sector, including crypto, and that experience has given us a practical appreciation for responsible innovation as well as the need for rules that protect consumers, support fair competition, and preserve confidence in the financial system.
The question is not whether blockchain technology or digital assets have a role in the future of finance. They clearly do. The question is whether that future will be built on a balanced regulatory foundation or on incentives that unintentionally pull funding away from the institutions responsible for much of America's local lending.
Banks use consumer and business deposits to fund small-business loans, home mortgages, credit cards, commercial real estate, agricultural lending and other productive investments. These are not abstract balance-sheet entries; they are the capital that helps a contractor buy equipment, enables a family to buy its first home, allows a manufacturer to expand and supports job creation.
If consumers and businesses are encouraged to move their money from bank deposits into stablecoins that offer interest-like rewards, those funds will no longer support local lending in the same way. Much of the money backing those stablecoins would instead be invested in Treasury securities and other reserve assets. At scale, that migration could put billions of dollars of lending capacity at risk, with smaller and rural communities among the first to feel the consequences.
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Congress recognized this distinction when it prohibited payment stablecoin issuers from paying interest to holders under the GENIUS Act. Lawmakers rightly saw payment stablecoins primarily as payment instruments — not as deposit substitutes. Yet some crypto companies have evaded that prohibition by offering yield-like rewards that mimic interest payments.
The Clarity Act gives the U.S. Senate an opportunity to close that gap through narrowly tailored language. Doing so would not undermine digital-asset innovation. It would reinforce the distinction Congress has already drawn, improve the legislation's prospects for passage and provide the crypto industry with the durable rules of the road it has long sought.
Verret also suggests that community bankers are failing to recognize the potential of blockchain technology and digital assets. That assertion is inconsistent with what is already occurring across the banking industry.
At banking conferences, in boardrooms, and within financial-technology partnerships, the convergence of traditional banking and modern finance is a central topic. Banks of all sizes are exploring tokenized deposits, blockchain-based payment systems, stablecoins, digital custody and other applications. In fact, our bank has a digital asset committee composed of a cross-section of leaders.
The U.S. can do two things at once: remain the banking capital of the world and become the crypto capital of the world, provided the right rules are in place. That is precisely the banking industry's objective: a digital financial system that fosters innovation without undermining the deposit base that supports households, businesses and communities.
Innovation conducted within a sound regulatory framework can expand access, lower costs, speed payments, and create new opportunities for consumers and businesses. But innovation should not depend on regulatory arbitrage or on offering the economic equivalent of a bank deposit without comparable obligations for consumer protection, capital, liquidity, compliance, and community responsibility.
I stand with my banking colleagues across the country—from the smallest rural institutions to the nation's largest financial institutions serving international businesses and every bank in between. We differ in size, geography, ownership, and strategy, yet we share a fundamental responsibility: converting deposits into credit that supports households, businesses, and local economic growth.
We also share an interest in building a digital financial system that serves the entire country — not merely a small number of companies seeking to preserve a legislative advantage.
Community banks are no one's stalking horse. We understand the technology, the economics, and the stakes. We have been transparent about our position and are speaking for ourselves in support of responsible innovation, durable rules and a financial system that continues to serve communities across America.
Let's hope the Senate is listening.
