The U.S. Independent Community Bankers Association, representing about 5,000 community banks, opposes the Digital Asset Market Clarity Act. Chair and CEO Rebeca Romero Rainey stated that loopholes related to stablecoin rewards must be completely closed, with no compromises. The association estimates that stablecoins could lead to $1.3 trillion in deposits leaving the banking system and reduce local lending by $850 billion.

She noted that there are no signs that cryptocurrencies will bring these deposits back and reinvest them in local communities. The association claims to have urged Republican Senators Josh Hawley and Jerry Moran to oppose the current text. She criticized the White House Council of Economic Advisers' report "The Impact of the Stablecoin Yield Ban on Bank Lending" for downplaying concerns about deposit outflows. The report estimated that a total ban on yields would have limited effects on boosting loans, and community bank lending would still increase far below the $850 billion figure provided by the association, even under what it called unrealistic assumptions.

The bill distinguishes between interest on idle balances and rewards based on real activity: it prohibits paying interest on payment-type stablecoins or yields that are economically equivalent to bank deposit interest; incentives for real transactions, such as credit card cashback, are not included in the same ban. Bank lobbyists are seeking to extend the ban to exchanges, affiliates, and intermediaries, not just issuers. The Senate plans to vote on September 15, and without at least 60 votes, it cannot proceed to further consideration.

Community bank balance sheets rely on local deposits to lend to small businesses and households. If stablecoin rewards approach deposit rates, the association describes it as a siphon. Crypto platforms describe the same mechanism as points for payment use, rather than deposit absorption. The $1.3 trillion and $850 billion figures are lobbying models, not realized outflows.

In market mechanics, the buyers are community banks wanting to preserve low-cost core deposits, while the sellers are exchanges and issuers using rewards to activate stablecoin balances. The event was triggered by the association's public opposition to the current text. Funds continue to oscillate between bank deposits and stablecoins until the legislative outcome is uncertain. Beneficiaries are platforms that can write rewards as transaction points, while community banks that support local credit with demand deposits are under pressure.

Source: Public information