Page 17 - Fall 2025 - Single Pages

stablecoins present a lower-cost alterna�ve to consumers and
businesses, I am all for it."

The lower cost is one a�ribute that stablecoin proponents say
support widespread usage of the payment type. Proponents also
believe it will improve transparency, traceability and speed of
transac�ons, par�cularly for global transac�ons, Stein Smith said.

However, there is debate about usability and widespread
adop�on. Namely, stablecoins must overcome a widespread lack
of trust in their stability, a lack of acceptance as a form of
payment and a lack of interest income — the currency does not
make money for individuals, unlike deposits.

If stablecoins are just being used as currency, "the risk of deposit
flight is not as drama�c as some might think," Ventricelli said.

While the GENIUS Act prohibits stablecoin issuers from paying
interest and yield, there are workarounds, such as offering
rewards to stablecoin customers. Issuers can also lend it, stake it
or provide liquidity to a decentralized exchange, but those
workarounds carry risk, Daragh Maher, head of digital assets
research at HSBC, said during a Sept. 30 webinar on digital assets
hosted by S&P Global Market Intelligence and HSBC.

He likened the poten�al workarounds to a �me when banks used
to hand out small appliances like toasters to a�ract deposits
because regula�ons restricted the amount of interest they could
pay on deposits.

"It's natural that stablecoin issuers will try and come up with
workarounds, and who doesn't like a toaster?" he said.

If customers start using stablecoins for more than just transac�ons
and realize they are able to generate a yield from it, banks could
lose deposits, sources said.

"At that point, the stablecoin becomes a means for investors to
gain a yield. And that's a much riskier use case in terms of deposit
flight," Ventricelli said.

But for now, banks may be overexaggera�ng the risk, Stein Smith
said.

"If there's any new entrants or any disrup�ve way of doing
business, there's always going to be pushback. There's always
going to be a li�le bit of hyperbole perhaps in terms of how
drama�c or how uncertain these new entrants could be," he said.

Arkansas Community Banker | 17 | FALL 2025