In an attempt to unblock financial legislation related to digital assets in the US Congress, companies in the crypto industry have presented two strategic proposals aimed at “taming” banks and allowing them to participate in the digital currency ecosystem.
The move, which comes after weeks of stalling in the Senate, is aimed at allaying traditional banks’ doubts about competition represented by dollar-pegged stablecoins.
According to a report by Bloomberg, the plan will allow stablecoin issuers such as Circle, Tether, and PayPal to Diversify the management of buried treasure. Instead of concentrating stablecoin support in large institutions like BNY Mellon and so-called megabanks, issuers will make commitments. Open a reserve account at a regional or regional bank across the country.
This measure will allow the capital backing the stablecoin to return to the local banking system. This improves the creditworthiness of these entities and alleviate concerns about mass outflows of deposits to digital asset platforms.
A community bank is a financial institution that: Focused on addressing the needs of specific geographic locationstown, city, county, etc. Some standouts include Alpine Bank in Colorado, People’s State Bank in Wisconsin, and City First Bank in Washington, D.C.
Unlike national megabanks such as BNY Mellon, Bank of America, and Wells Fargo, these companies They build their business model on the personal knowledge of their customers And to support the local economy.
In the United States, community banks make up the majority of banking institutions in the country. According to data from the Federal Deposit Insurance Corporation (FDIC). These companies handle approximately 15% of total bank deposits. At the national level.
However, its importance Disproportionally high in the lending sector. That’s because it finances nearly 60% of small business loans and more than 80% of agricultural loans nationwide, according to the same sources.
A second proposal for the “domestication” of US banks considers that regional financial institutions could partner up to issue their own stablecoins.
Through these associations, community banks will cease to be outside competitors. To become an active market participant.
This will allow us to offer customers a digital dollar equivalent directly linked to their deposits, generating new fee income. Attracting native users of the Bitcoin sector and other distributed technologies.
The road is not without obstacles
Sen. Tim Scott, chairman of the Senate Banking Committee, expressed optimism about reaching a halfway point between the two sectors. “We can protect consumers and community banks while allowing innovation and competition to lower prices and expand access,” Scott said in a recent statement.
“Both parties are working to reach a compromise that preserves innovation here in the United States,” he said.
But the path to an agreement is not without obstacles. Tensions reached a critical point during a meeting held at the White House on February 2, led by Patrick Witt, executive director of the President’s Advisory Council on Digital Assets in the Donald Trump administration.
At the conference, representatives from the banking and digital currency sectors discussed interest payments and rewards that platforms such as Coinbase offer to users who hold stablecoins.
From the bank’s perspective, these revenues are recognized as follows: It is a direct threat to traditional savings accounts. Cryptocurrency representatives have expressed dissatisfaction with banks’ aggressive stance.
CriptoNoticias reports that President Donald Trump’s administration has set a deadline of the end of February to reach an agreement on a transparency law that defines the powers of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).
Unless the dispute over the operation of stablecoins is resolved, it is extremely unlikely that the bill will be enacted this fiscal year.