Happy 250th birthday, America! As we celebrate our republic, we are reminded that one of our nation’s greatest strengths has been embracing change and innovation while building safeguards that protect the people and communities that fuel our economy.
This goes for banking, too. It’s easy to forget, but this nation didn’t always have a stable monetary system. President Andrew Jackson fought the powerful elite to decentralize savings and lending. Even the almighty dollar was once up for debate; it wasn’t until the 1870s that Congress would issue “greenbacks” everyone could count on.
Financial innovation has succeeded because policymakers took the time to ensure new ideas strengthened, not weakened, the foundation of our economy. But innovation should never come at the expense of the families and farmers that depend on community banks, the backbone of America’s financial system.
These institutions put local deposits to work in the communities they serve, providing loans that help them thrive. More than 99% of businesses in Pennsylvania are small businesses, and small farms — those generating under $250,000 in revenue — make up 85% of the 49,000 farms in our state. Agriculture contributes $27.5 billion to Pennsylvania’s gross state product, and farms, like small businesses across the state, depend most on the kind of relationship-driven lending community banks provide.
Unfortunately, state legislation currently being considered in Harrisburg poses a serious threat to local lending and the communities that depend on it.
House Bill 2647 would allow faceless crypto platforms and payment stablecoins (price-stabilized cryptocurrencies) to operate alongside community banks, but without the same Federal Deposit Insurance Corp. (FDIC) insurance requirements, antidiscrimination rules, capital requirements, and other public protections community banks are obligated to maintain.
Beyond weakening consumer protections, the Independent Community Bankers of America estimates yield-bearing stablecoins could pull $1.3 trillion in deposits from community banks nationwide, cutting local lending capacity in Pennsylvania by approximately $35 billion. Every dollar that leaves a community bank is one less dollar available to help a family buy a home, an entrepreneur start a business, or a farmer plant next season’s crops.
If legislation allowing state licensing of payment stablecoin issuers advances without adequate safeguards, it will weaken local lending and undermine Pennsylvania’s economy.
That is why the current stablecoin debate deserves careful attention.
Community banks support responsible innovation. As the president of the Pennsylvania Association of Community Bankers, I see the cohort of community banks actively exploring new technologies and recognizing that digital assets will play a vital role in the future of finance. But stablecoins should function as a payment mechanism — not as interest-bearing investment products competing directly with federally insured bank deposits.
Unfortunately, as currently drafted, significant loopholes remain that encourage unfair competition and ignore important protections consumers deserve and have come to expect.
Community banks have never feared competition. We have welcomed it for more than 160 years. What we are asking for is a level playing field — one that encourages innovation without sacrificing the proven financial model that has financed America’s hometowns for generations.
Lawmakers should slow the march toward stablecoins long enough to ensure innovation strengthens, not weakens, the community banking system that finances Main Street and homeownership in America.
As we celebrate our nation’s 250th birthday, we should remember that America’s greatest achievements haven’t resulted from choosing between innovation and stability, but from insisting on both.
Kevin Shivers is the president and CEO of the Pennsylvania Association of Community Bankers.
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