01/07/26

The Senate Banking Committee is moving quickly toward a markup of major digital asset market structure legislation next week, a decision by Chair Tim Scott that has elevated the stakes for Ohio banks. While the debate in Washington may sound technical, the outcome will have direct and immediate consequences for how banks compete for deposits, how credit flows to local economies, and how risk is allocated across the financial system. Act now by sending a message to both Ohio Senators here.

At the center of the legislation is the treatment of stablecoins under the GENIUS Act framework. Congress intentionally prohibited stablecoin issuers from paying interest so these products would function as payment tools, not as substitutes for bank deposits. That prohibition is now being tested.

Some crypto firms are pressing lawmakers to allow affiliates and partners—such as exchanges and platforms—to offer “rewards” or yield tied to stablecoins. From a banker’s perspective, this is interest by another name. If allowed, it would give lightly regulated entities the ability to compete directly with insured deposits while avoiding the capital, liquidity, CRA, and supervisory requirements banks must meet. For Ohio banks, this is not an abstract policy debate. Deposits fund mortgages, small-business loans, agricultural credit, and municipal financing. If stablecoins are permitted to offer yield-like inducements, customers will be incentivized to move funds out of banks and into products that do not support local lending.

Several members of the Senate Banking Committee have acknowledged that unresolved stablecoin yield issues could determine whether the bill advances at all. Despite these concerns, Chair Scott is pressing ahead with a markup. That means key policy decisions could be locked in quickly—potentially without fully accounting for how the final language affects banks and the communities they serve.

Treasury analysis has warned that allowing yield-like features on stablecoins could divert trillions of dollars from the banking system. Today, roughly $6.6 trillion in bank deposits support lending and economic activity nationwide. If even a fraction of those funds migrate to nonbank stablecoin arrangements, the impact would be felt most acutely by community-based lenders.

For Ohio, that could mean:

• Reduced capacity to make small-business and agricultural loans
• Higher borrowing costs for consumers
• Less credit available in rural and underserved communities

Banks are uniquely positioned to turn deposits into productive economic growth. Stablecoins offering yield do not perform that function, yet they would compete directly for the same customer funds.

With a committee vote expected next week, lawmakers are making final judgments now. Crypto firms are lobbying aggressively to preserve the yield loophole, betting that limited time and compressed debate will work in their favor. We must make our voice heard, silence from bankers risks being interpreted as acceptance. Ohio bankers have credibility that no national talking point can replace. Senators need to hear how this issue affects balance sheets, lending decisions, and real customers—not just markets and technology.

Chair Scott’s decision to move forward has turned this into a now-or-never moment. The question before Congress is whether stablecoins remain payment instruments—or evolve into unregulated deposit substitutes that drain capital from local communities. Act now by sending a message to both Ohio Senators here.