Crypto Comes to Main Street: What It Means for Your Bank
With so much coverage in both the popular and industry press, enthusiasm around digital assets is impossible to miss. Just keeping track of the diverse types—Cryptocurrencies, Stablecoins, Central Bank Digital Currencies, Tokenized Deposits, Non-Fungible Tokens (NFTs), and more—can be a challenge. And with so much noise, it’s hard to know what’s truly important for community bankers.
Yet, beneath the buzz, there are real risks and opportunities. The recent passage of the GENIUS Act and Clarity Act, the excitement around Stablecoins, and the dire warnings from some corners about how digital assets could upend payments and finance all point to something significant. But what exactly is happening—and what does it mean for your bank right now?
GENIUS and Clarity Acts: A New Era of Regulation
The regulatory landscape for digital assets in the U.S. has shifted dramatically in 2025. With the passage of the GENIUS Act and the Clarity Act, Congress has made it clear: digital assets are no longer fringe instruments. They’re now part of the regulated financial system.
- The GENIUS Act, signed into law in July, creates the first federal framework for payment Stablecoins. It defines who can issue them, what backing is required, and the oversight they’ll face.
- The Clarity Act complements this by resolving the long-standing tug-of-war between the SEC and CFTC, clarifying which digital assets are securities and which are commodities.
Together, these laws mark a turning point in digital finance regulation—and they matter for banks.
A Shift in Tone: The Trump Administration’s Pro-Innovation Stance
The tone from Washington has changed. Under President Biden, regulators were cautious, often skeptical about banks engaging with digital assets. The focus was on enforcement and risk avoidance.
Now, under the Trump administration, the message is different. The newly formed White House Working Group on Digital Assets has made it clear: the U.S. intends to lead the global digital asset economy. The regulatory environment is shifting from caution to encouragement—and that opens new doors for banks.
Risks and Rewards: What Digital Assets Mean for Your Bank
Legal and regulatory updates have clarified banks’ potential involvement with digital assets, but the topic remains complex and fast-moving. Here are three key areas to watch:
1. Deposit Disintermediation Risk
The GENIUS Act restricts Stablecoin issuance to regulated entities—like subsidiaries of insured depository institutions. That’s good news for banks, as it keeps Big Tech out unless they partner with banking institutions. Still, there’s risk. The American Bankers Association estimates that up to 10% of U.S. bank deposits could migrate to Stablecoins, potentially squeezing interest margins by 20–30 basis points. That’s a real concern for banks that rely on low-cost deposits to fund lending.
2. Opportunities to Participate
The GENIUS Act also opens the door for banks to issue Stablecoins through subsidiaries, offer custody services, and engage with the digital asset ecosystem. Some customer banks are already contemplating—or even implementing—Stablecoin issuance. It’s a heavy lift, requiring upfront investment, operational rigor, and full compliance with BSA/AML and OFAC rules. But the opportunity is real.
3. Regulatory Complexity
The Clarity Act clarifies asset classifications—but also introduces nuance. A digital asset may start as a security and later become a commodity, depending on its use and decentralization. If your bank holds digital assets, you’ll need to monitor these classifications and adjust your compliance framework accordingly.
Stablecoins: A Gateway to Digital Finance for Community Banks
Stablecoins may be the most accessible entry point for banks into digital finance. Issuing them requires control over cryptographic keys, robust cybersecurity, and strict compliance. But for banks willing to invest, the GENIUS Act provides a clear regulatory path.
Bankers’ Bank is already hearing from customer banks exploring Stablecoin issuance. It’s not easy—but it’s possible. And it could be a strategic move for banks looking to innovate.
The Future of Payments: Stablecoins as a New Rail?
Looking ahead, Stablecoins could reshape payments. A payment rail based on Stablecoins could be secure, near-instantaneous, and extremely inexpensive—fractions of a cent per transaction.
But there are hurdles. The Bank for International Settlements (BIS) notes that Stablecoins often fail key tests:
- Singleness: Are they universally accepted?
- Elasticity: Can they handle large-value payments?
- Integrity: Can they prevent illicit activity?
As the ABA puts it, Stablecoins as envisioned today fail as “sound money.” They trade at varying exchange rates, require full upfront payment, and pose compliance challenges. These issues may limit their role in mainstream payments—for now.
Beyond Payments: Tokenization and the Long-Term Vision for Finance
Even farther on the horizon is the idea of tokenization—moving money, securities, and other assets onto cryptographic, programmable platforms. The vision is a unified ledger where central bank reserves, commercial bank deposits, and government securities coexist and interact seamlessly.
Community banks may one day partner with fintechs to offer tokenized deposit products or digital asset custody. Or they may choose to wait and see. Either way, this could be the beginning of a new chapter in American banking.
Strategic Choices: Lead, Follow, or Observe—But Stay Informed
Whether your bank chooses to lead, follow, or observe, one thing is clear: staying informed is no longer optional. Digital assets are evolving quickly, and community banks have a role to play—if they choose to.
Start by forming a workgroup within your bank to discuss what’s happening and what it might mean. Your board and senior management need to understand the regulatory framework, the technological implications, and the competitive landscape. Talk to your regulators. Talk to your vendors. Talk to your board.
Conclusion: The Time to Learn Is Now
Digital assets may not be part of your bank’s strategy today, but they have the potential to shape the future of finance. The GENIUS and Clarity Acts have laid the groundwork. Now it’s up to you to decide how—and when—to engage.
Whether you dive in or simply stay informed, the digital asset economy is moving fast. Understanding it is no longer a luxury—it’s essential.
References and Further Reading
ABA GENIUS Act Summary, July 18, 2025 (Login Required)
BIS Annual Economic Report 2025: Part III: The next-generation monetary and financial system