This year’s ICBA Capital Summit in Washington, D.C. reinforced the importance of community bankers staying engaged in the legislative process. If we are not actively involved, decisions will be made without the perspective of the communities we serve every day.
The timing of this year’s Summit was especially important. While we were in Washington, lawmakers were actively discussing stablecoin legislation and drafting what has become known as the Clarity Act. Our group had the opportunity to meet directly with congressional offices to discuss concerns with the bill. While the GENIUS Act, passed on July 18, 2025, prohibits stablecoin issuers from paying direct interest or yield on stablecoins, the proposed Clarity Act introduces a compromise approach. Under the draft language, issuers would still be prohibited from offering deposit-like interest payments, but digital asset platforms could potentially provide “activity-based rewards” tied to stablecoin holdings. We remain concerned this approach could create a loophole that allows the payment of interest and ultimately lead to funds moving outside the traditional banking system.
Since returning home, we have continued those conversations through additional virtual meetings
with members of Congress and their staff. Our focus has been ensuring policymakers understand the potential impact these proposals could have on community banks, our customers, and the local economies we support.
At the center of the discussion is the role deposits play in community banking. Local deposits support lending for agriculture, small businesses, housing, and community growth. If significant deposits move outside the regulated banking system and into stablecoin platforms, lending capacity in rural communities and small towns across South Dakota and the nation could be reduced.
Fewer deposits ultimately mean less available credit and potentially higher borrowing costs for customers. Community bankers understand firsthand how critical access to capital is for producers, entrepreneurs, and local businesses.
Consumer protection is also a major concern. Many consumers may not fully understand the difference between funds held in a regulated financial institution and funds placed with a stablecoin issuer or exchange. Community banks operate under strict regulatory oversight, maintain FDIC insurance protections, and contribute to the Deposit Insurance Fund to help safeguard customer deposits and preserve confidence in the financial system.
Innovation in payments technology has value, and community bankers support efforts to improve payment efficiencies. However, as stablecoin policy evolves, lawmakers must establish appropriate guardrails that protect consumers, preserve financial stability, and maintain a level regulatory playing field.
Even if you could not join us in Washington, you still play an important role in the advocacy process and can be part of the conversation. By signing up for ICBA’s grassroots advocacy emails, you can stay informed and quickly share concerns directly with lawmakers through ICBA’s easy-to-use advocacy tools. Learn more at: icba.org/advocacy/grassroots-be-heard
Advocacy has always been an essential part of community banking, and this year’s Capital Summit served as another reminder that our voice remains both necessary and impactful.