Crypto Industry Proposes to Share Stablecoin Reserves with Community Banks: Report

Crypto companies offered concessions on stablecoins, including sharing reserves with banks, to ease tensions that blocked a major digital asset account.

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 law, which could significantly change the financial system.

Deposit fears and the search for compromises

A Bloomberg report revealed that crypto companies have spent weeks trying to win over questionable banks by offering new concessions focused on stablecoins, which have become the focal point of contention.

According to sources cited in the report, the latest ideas include giving community banks a bigger role in the stablecoin ecosystem. One proposal would require issuers to hold some of their reserves with these financial institutions. Another recommendation would make it easier for these companies to issue their own dollar-pegged digital assets.

However, the two sides have not yet agreed on a solution, and it remains unclear whether the proposals would go far enough to allay fears that customers will remove their deposits from the banking system.

A separate report from analyst Geoff Kendrick had warned that stablecoins could lead to the disappearance of as much as $500 billion in bank deposits in industrialized countries by the end of 2028. This is because the overall digitized dollar market continues to experience remarkable growth, with the total supply in circulation increasing by approximately 40% over the past year.

Digital asset companies 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 will allow users to pay rewards for owning stablecoins. Traditional financial institutions also argue that these payouts could draw customers away from checking and savings accounts, threatening an important source of deposits for them.

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In an effort to resolve this, the Trump administration convened a meeting at the White House between crypto and banking trade groups on Monday, but the talks ended with no agreement on how to resolve these core issues.

Despite the friction, the development is still seen as a positive sign that the market structure bill in Congress will continue to move forward. This is after the legislation passed the House of Representatives last year but has since been delayed in the Senate due to unresolved disagreements between the two sectors.

Meanwhile, Senate Banking Committee Chairman Tim Scott expressed optimism about finding a compromise in a recent interview with Fox News.

“We can protect consumers and community banks while allowing innovation and competition to lower prices and expand access,” the senator said. “Both parties are working on a compromise that keeps innovation here in America.”