Community banks do not need to issue a stablecoin to benefit from stablecoins. But they do need to make sure their customers can use new forms of digital money without leaving the bank relationship behind.
That distinction matters. For years, smaller banks have watched customers move toward larger institutions with better apps, faster payments, and more convenient treasury services. An April 2025 Better Markets report found that banks with less than $10 billion in individual assets collectively held roughly $2.5 trillion, a total that had changed little over three decades even as the largest banks grew dramatically. That pressure on smaller banks well predates stablecoins.
Still, many bank leaders see digital dollars as a threat to deposits, and at first glance, the concern may be understandable. Deposits fund lending and support liquidity. If a customer exchanges a bank balance for a stablecoin, the bank may lose funding and margin.
The fear isn’t irrational, but the data so far don’t support it. The American Bankers Association, citing an April 2025 Treasury Borrowing Advisory Committee estimate, warns that as much as $6.6 trillion in transactional deposits are theoretically exposed to stablecoin migration, and has lobbied Congress to close what it calls a yield loophole in stablecoin rules. But that figure describes an exposed pool, not an observed outflow. Community bank deposits actually grew roughly 26%, or about $482 billion, between June 2019 and March 2026 — spanning the entire rise of stablecoins — and independent studies from CRA International and the Council of Economic Advisers have found no statistically significant relationship between stablecoin growth and community bank deposit outflows over that period. That pattern echoes what happened with money-market funds and brokered CDs, products that have out-yielded checking accounts for decades without emptying them.
The more immediate danger is that banks protect the deposit but lose everything around it.
A business may leave its balance at a community bank while using another company for payments, foreign exchange, merchant services, and treasury management. Over time, that outside platform gets the transaction data, the fee revenue, and the daily customer contact. The bank remains the place where money sits, but no longer the place where the customer’s financial decisions happen.
This is already how tomorrow’s commercial customers are being formed. Mercury says it serves more than 300,000 businesses and individuals. A ten-person startup that builds its financial operations on a fintech platform today may become a major corporate client in a decade. By then, moving its payment and treasury workflows will be expensive and disruptive. The community bank never loses the depositor because the depositor never arrives.
Stablecoins and tokenized deposits can help smaller banks compete for that relationship. They solve different problems and may converge over time. Stablecoins offer broad, always-available connectivity across open blockchain networks, especially for cross-border payments. Tokenized deposits can preserve a familiar bank liability while adding faster settlement and software-based controls inside participating networks. Neither should be treated as the single winner.
Congress has made this easier by passing the GENIUS Act and establishing a federal framework for payment stablecoins. Banks now have a clearer basis for deciding where to partner, what services to offer, and how to manage risk. Waiting for every technical and regulatory question to disappear is itself a choice, and probably the riskiest one.
So, what should a community bank build?
Probably not a blockchain from scratch. Smaller banks can buy or partner for the basic infrastructure, connect customers to stablecoins and tokenized-deposit networks where useful, and retain control over compliance, liquidity, lending, data, and payment routing. Existing rails will remain important. Nacha reports that the ACH Network processed 33.6 billion payments worth $86.2 trillion in 2024. The goal is not to replace a system that works, it’s to give customers the right rail for each transaction.
Community banks begin with an advantage that technology companies must spend heavily to acquire: trust. New technology can extend that advantage if banks use it to make payments faster, reach customers earlier, and keep the full financial relationship together. In the end, the banks that prosper will not be those that defended one form of deposit at all costs. They will be the ones that give customers the most choice without having to leave the institution they trust.
The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.