The Independent Community Bankers of America has launched a six-figure advertising campaign in Washington opposing the Clarity Act, a pending bill that would regulate stablecoins, arguing that the legislation would allow crypto companies to offer incentives that would pull deposits away from small lenders and trigger a credit crunch for rural businesses and farmers.
A 30-second video that debuted in Washington this month shows images of a small Midwestern town alongside a voiceover warning that “when crypto gets a free pass, communities pay the price.” The campaign represents a significant expansion of the political fight over cryptocurrency regulation, bringing thousands of small-town banks into a lobbying battle that has largely been waged between large Wall Street lenders and crypto companies.
The ICBA, which represents about 4,000 small community banks across the U.S., is focused on a provision of the Clarity Act that would allow companies issuing stablecoins — cryptocurrencies whose value is typically pegged to an asset such as the U.S. dollar — to pay rewards or incentives to customers who use or transfer them. The group warned that such incentives could encourage customers to move their money out of local banks and onto crypto platforms.
ICBA president Rebeca Romero Rainey said the potential loss of deposits would directly affect lending for small businesses and farms. Community banks fund more than 60% of all small business loans and 80% of agricultural loans across the U.S., she said.
“If the Clarity Act passes in its current form, how are those loans funded in the future? And we might argue they wouldn’t be,” Rainey said.
The warning from community banks creates a political challenge for Republican lawmakers as they head toward the midterm elections, pitting the Trump administration’s effort to legitimize cryptocurrencies against the interests of small farmers and rural borrowers who have historically provided reliable support for many Republican incumbents.
Troy Richards, president of Guaranty Bank & Trust, a nine-branch lender based in northeast Louisiana, said $40,000 had flowed out of customer accounts to crypto investments over the preceding 90 days — a modest sum for a bank with $330 million in assets, but one he described as a worrying sign. He said the outflows would accelerate if stablecoin issuers were allowed to pay interest or rewards.
“These crypto issuers are not in our local communities. They can’t sit across the desk from a farmer, or from a small business owner, and counsel with them on how to improve their business,” Richards said. “They don’t sponsor the local little league team, they don’t buy ads in the local high school yearbook, and they’re not paying local ‘ad valorem’ taxes.”
Cody Carbone, chief executive of the Digital Chamber, a crypto trade group, rejected the ICBA’s claims.
“ICBA’s campaign isn’t about protecting Main Street, it’s about shielding an outdated model from competition,” Carbone said. “Our industry is fighting for clear federal rules through the Clarity Act, while ICBA is fighting to keep Americans locked out of innovation.”
Carbone said the crypto industry represents about 70 million Americans who own digital assets. He argued that major concessions had already been made to banks, noting that the Clarity Act originally allowed rewards to be paid on stablecoin holdings themselves — akin to traditional interest on deposits — but was revised to limit rewards to usage and transactions.
The ICBA said it welcomes competition but wants a “level playing field” where any firm vying for deposits is subject to the same regulation, safeguards and capital requirements as banks. Richards said small banks had already adapted to the rise of fintech companies and were “not afraid of competition so long as it’s fair.”
“I think the crypto industry has done a pretty effective job of getting their message across,” Richards said. “It’s our turn now.”
The ICBA’s campaign follows opposition from large banks including JPMorgan Chase to key elements of the Clarity Act. MSI previously reported that JPMorgan, Citigroup, Bank of America, Wells Fargo and other major lenders are developing their own tokenized deposit network to compete with stablecoins, set to launch in the first half of 2027.