ICBA analysis: Permitting interest on payment stablecoins would harm community bank lending 

With Congress crafting legislation to establish a regulatory framework for digital assets markets, ICBA released new data showing the harmful impact on local economies of allowing crypto exchanges, affiliates, and other intermediaries to pay interest, yield, or rewards on payment stablecoin holdings. 

Impact: ICBA’s analysis of industry research found that continuing to allow crypto intermediaries to pay interest or yield on payment stablecoin holdings would reduce community bank lending by $850 billion due to a $1.3 trillion reduction in the industry’s deposits—significantly diminishing access to credit in local communities. 

Statement: In a national news release, ICBA President and CEO Rebeca Romero Rainey said the analysis shows that Congress must extend the prohibition on payment of yield and interest on payment stablecoin holdings to crypto exchanges, affiliates, and other intermediaries. 

Message to Community Bankers: In a message to community bankers, Romero Rainey said she knows how concerning this data is to those who have dedicated their lives to this industry. “But ICBA’s analysis is critical to showing Congress the gravity of this issue, why lawmakers must avert harm to local communities, and how guardrails on payment stablecoin yield and interest would avoid this worst-case scenario,” she said. 

Community Banker Input Needed: With the Senate working to take up proposed crypto market structure legislation and a markup coming as soon as January, ICBA continues calling on community bankers to use its Be Heard grassroots action center to urge senators to ensure the measure bars all digital assets market participants from offering yield, interest, or rewards on payment stablecoins. 

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