Stablecoin rewards could drain regional bank lending, First Dakota National Bank executive says

If the CLARITY Act under discussion in the U.S. Senate does not sufficiently limit stablecoin rewards, deposits could flow out of regional banks and reduce their lending capacity, Nate Franzen, head of agricultural finance at First Dakota National Bank, argued in a CoinDesk opinion piece. Citing an estimate from the American Bankers Association, Franzen said as much as $4.7 billion of roughly $47 billion in deposits at South Dakota regional banks could shift into stablecoins, cutting lending capacity by up to $3.7 billion. Franzen added exchanges or wallet providers offering rewards akin to interest could allow stablecoins to replace bank deposits and weaken local lending, and called for tighter regulation.