Crypto companies have proposed giving community banks a greater role in stablecoin reserves in an effort to ease tensions and secure support for a stalled crypto market structure bill. The legislation, which passed the House last year, could significantly reshape the financial system, but disagreements between the crypto industry and traditional banks have slowed its progress in the Senate.
According to Bloomberg, the latest proposals include requiring stablecoin issuers to hold a portion of their reserves at community banks and making it easier for these institutions to issue their own dollar-pegged digital assets. These concessions aim to address bank concerns and prevent large deposit outflows, which some analysts warn could reach $500 billion across industrialized nations by 2028 if stablecoin adoption continues unchecked. Meanwhile, the overall supply of digitalized dollars has grown roughly 40% over the past year, highlighting the sector’s rapid expansion.
Not all crypto firms are aligned with the proposals. A key point of debate is whether platforms like Coinbase should be allowed to offer rewards to users for holding stablecoins. Traditional banks argue that such incentives could pull customers away from checking and savings accounts, threatening a major source of deposits.
In a bid to resolve these disagreements, the Trump administration recently hosted a meeting at the White House between crypto and banking trade groups, but no agreement was reached. Despite this, the effort is seen as a positive sign that the bill could continue to move forward. Senate Banking Committee Chair Tim Scott expressed optimism about finding common ground, stating that it is possible to protect consumers and community banks while fostering innovation and competition to lower costs and expand access to financial services.
