Crypto Industry Proposes To Share Stablecoin Depositories With Community Banks: Report

Crypto firms have offered concessions to stablecoins, including sharing reserves with banks, to ease tensions blocking a major digital asset bill.

The crypto industry has reportedly proposed sharing stablecoin reserves with public lenders as it steps up efforts to win over skeptical banks.

This move aims to preserve a standing bill for the structure of the crypto market that could significantly change the financial system.

Fear of Deposit and the Search for Consensus

A Bloomberg report revealed that crypto firms have spent weeks trying to win over skeptical banks by offering new deals focused on stablecoins, which have been a major point of disagreement.

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

However, the two sides have yet to agree on any solution, and it is unclear whether these proposals will go far enough to address customers’ fears of withdrawing their bank deposits.

A separate report by analyst Geoff Kendrick had warned that stablecoins could lead to a $500 billion outflow of bank deposits in industrialized countries by the end of 2028. This comes as the overall digital dollar market continues to experience significant growth, with the total amount in use up nearly 40% over the past year.

Digital Asset Firms Stay Different

On the other hand, not all crypto companies comply with the proposals. One of the biggest points of contention is whether platforms like Coinbase should be allowed to reward users for holding stablecoins. Traditional financial institutions also say these fees could draw customers away from checking and savings accounts, threatening a major source of their deposits.

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In an attempt to resolve this, the Trump administration called a meeting at the White House on Monday between crypto trading groups and banks, but the talks ended without an agreement to resolve these main issues.

Despite the controversy, the development is still seen as a positive sign that the market structure bill will continue to move through Congress. This is after this law was passed by the parliament last year, but it has been withdrawn in the Senate due to disagreements between the two sections.

Meanwhile, in a recent interview with Fox News, Tim Scott, chairman of the Senate Banking Committee, expressed his hope for a consensus.

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