Crypto Industry Proposes Sharing Stablecoin Reserves with Community Banks: Report

The crypto industry has reportedly proposed sharing stablecoin reserves with community lenders as it steps up efforts to win over skeptical banks. The move aims to preserve the stalled crypto market structure bill that could significantly alter the financial system. Deposit Fears and the Search For Compromise A Bloomberg report revealed that crypto firms have spent weeks trying to win over doubtful banks by offering new concessions focused on stablecoins, which have become the central point of disagreement. According to sources cited in the report, the latest ideas include giving community banks a larger role in the stablecoin ecosystem. One proposal would require issuers to hold a portion of their reserves at these financial institutions. Another recommendation would make it easier for these firms to issue their own dollar-pegged digital assets. However, the two sides have not agreed on any resolution, and it remains unclear whether the proposals would go far enough to address fears of customers moving deposits out of the banking system. A separate report from analyst Geoff Kendrick had warned that stablecoins could lead to the exit of as much as $500 billion in bank deposits across industrialized nations by the end of 2028. This comes as the overall digitalized dollar market continues to experience notable growth, with the total supply in circulation having risen by roughly 40% over the past year. Digital Asset Firms Remain Divided On the other hand, not all crypto companies are aligned with the suggestions. One of the biggest points of contention is whether platforms like Coinbase should be allowed to pay users rewards for holding stablecoins. Traditional financial institutions also argue that these payouts could pull customers away from checking and savings accounts, which threatens a major source of deposits for them. In an attempt to resolve this, the Trump administration convened a meeting at the White House on Monday between crypto and banking trade groups, but the talks ended without agreement on how to resolve these core issues. Despite the friction, the development is still being viewed as a positive sign that the market-structure bill will keep moving in Congress. This is after the legislation was passed by the House of Representatives last year, but has since slowed in the Senate due to unresolved disagreements between the two sectors. Meanwhile, in a recent interview with Fox News, Tim Scott, the chairman of the Senate Banking Committee, expressed his optimism about finding a compromise. “We can protect consumers and community banks while still allowing innovation and competition to lower prices and expand access,” the senator said. “Both sides are working toward a compromise that keeps innovation here in America.” The post Crypto Industry Proposes Sharing Stablecoin Reserves with Community Banks: Report appeared first on CryptoPotato .