The banking lobby is wrong about stablecoins and community banks

Stablecoins are no longer a fringe market. Their total supply has exceeded $300 billion, and USDT₮, the largest stablecoin, briefly overtook Ethereum by market capitalization to become the second-largest digital asset behind bitcoin. Banks are right to pay attention.

But paying attention is different from pressuring Congress to slow the market down.

Stablecoins create new competition around payments, settlement, float, and customer relationships. Some of that competition will be uncomfortable for banks. It should be. Financial technology does not move forward only when incumbents are comfortable.

That does not make stablecoins a systemic threat to community banking.

There is a precedent for this. Over the last decade, fintech companies embedded banking features into consumer apps, business platforms, payroll tools, lending products, and payment systems. Many did so through bank partners. That changed how customers interacted with financial services. It created new competition. It pushed banks to modernize. But it did not wipe out community banking.

Fintech applications like PayPal and Stripe have popularized digital banking and built large user bases since their emergence. However, banks have never treated fintech as a threat, but rather as an opportunity to expand their offerings and improve user experiences through collaborations and integrations. Looking at the numbers alone, SoFi, the largest publicly traded fintech bank, had $37.5 billion in total deposits in the last quarter of 2025, accounting for less than 0.2% of the US bank’s $20 trillion deposit base. If fintech was never a threat, why treat stablecoins differently?