US Community Banks Start Ad Campaign Opposing Stablecoin Holder Rewards

U.S. community and regional banks are pushing back against efforts to allow rewards for stablecoin holders, as tensions rise between traditional finance and the crypto industry over stablecoin regulation.

The Block reported on June 11 that the Independent Community Bankers of America had launched a new advertising campaign tied to digital-asset legislation under discussion in the U.S. Senate.

The ICBA said changes made during the legislative process incorporated requests from the crypto industry, including a provision on "rewards" that could indirectly provide returns to stablecoin holders.

The group argues that the provision could effectively allow interest payments on stablecoins.

Traditional banks are concerned that if users can earn returns by holding stablecoins, deposits could flow out of commercial banks in large amounts.

Community banks in particular say a weaker deposit base could also undermine small-business lending and the provision of local financial services.

In Congress, key issues in recent debates over the CLARITY Act and the broader stablecoin regulatory framework have included interest payments on stablecoins, protections for DeFi developers and the scope of anti-money-laundering rules.

Market participants view the direction of stablecoin regulation as a key factor in the future growth of the U.S. digital-asset industry and its competitive dynamics with traditional finance.