May 8, 2026
Senator Elizabeth Warren, Ranking Member
Committee on Senate Banking, Housing, and Urban Affairs
United States Senate
Washington, DC 20510
Dear Senator Warren and Minority Members of the Senate Banking Committee:
NCRC writes to urge you to vote no on any digital asset market structure bill at markup unless the committee-reported legislation includes strong, enforceable ethics and conflicts-of-interest provisions, meaningful protections against deposit flight, and clear safeguards against illicit finance, fraud, and consumer harm.
NCRC especially opposes any market structure legislation that does not address the serious risks created by the digital asset market to low- and moderate-income (LMI) households and communities and the stability of our financial system, including the risks of:
- deposit flight from traditional banks to stablecoin companies;
- a resulting decline in lending and community development financing;
- conflicts of interest; and
- systemic fraudulent activity.
NCRC is a coalition of 700+ grassroots organizations that create opportunities to build wealth in underserved communities through affordable housing development, small business support, and workforce training. We work with banking institutions to fulfill their obligations to the Community Reinvestment Act (CRA), which requires reinvestment of deposits in LMI communities through lending, bank branch openings, and financing of needed community development projects.
As you prepare for the likely markup, we ask that you keep in mind the following:
1. Markup draft must include effective conflicts of interest and ethics provisions that are available to the public for review and comment in advance of the markup.
The Committee should reject any argument that ethics provisions should be deferred and not included in the markup draft because they are outside the Committee’s jurisdiction. The legislation under consideration would define the legal structure of digital asset markets, assign regulatory authority, create exemptions and obligations, and determine who may participate in these markets under federal law. Effective controls, including those governing conflicts of interest and ethics, are essential for the development of the overall market structure.
At a minimum, effective provisions would prohibit covered officials (including the president, vice president, members of Congress, senior administration officials, federal employees, and their immediate family members) from engaging in specified activities regarding digital assets, stablecoins coins, tokens, trading platforms, decentralized finance (DeFi) protocols, or other cryptocurrency related ventures. The prohibited activities should include issuing, sponsoring, endorsing, promoting, materially supporting, or benefiting in any way from those products or platforms. The provisions should include effective enforcement mechanisms and require immediate divestment of covered officials engaged in prohibited activities.
2. Current yield compromise language will not prevent deposit flight.
As you know, in January, the Committee postponed the mark-up of the crypto market structure bill to allow for the development of a compromise regarding the bill’s treatment of yield payments. The GENIUS Act prohibits permitted payment stable coin issuers from paying “the holder of any payment stable coin any form of interest or yield (whether in cash, tokens, or other consideration) solely in connection with the holding, use, or retention of such payment stablecoin.”[1] The prohibition in the GENIUS Act is limited to issuers, not other players in the stablecoin ecosystem, namely, cryptocurrency exchanges and wallets that pay yield or rewards to holders.
News reports indicate that there is a proposed compromise regarding the treatment of yield, but it remains inadequate to address the risk of deposit flight (see below) because its exceptions swallow the rule. The proposal prohibits rewards offered “in a manner that is economically or functionally equivalent to payment of interest or yield on an interest-bearing bank account.”[2] This creates a loophole that would allow third parties (like exchanges and wallets) to pay interest or yield to stablecoin users for participation in the third parties’ membership programs – “so long as the payments are not calculated or distributed like banks’ payment or distribution of interest or yield.”[3] But, it also apparently according to reports, allows “rewards” to be calculated by reference to duration, balance, and tenure[4] – which is exactly how yield and interest payments on bank account deposits are calculated. These exceptions undercut the so-called yield prohibition compromise, rendering it ineffective.
3. Resulting deposit flight will mean less community development and an unequal playing field for banks that will hurt LMI communities.
If enacted, the yield compromise will encourage deposit flight, namely the movement of funds by households and businesses from bank deposit accounts to stablecoins. Bank deposits fund bank lending activities and community investment and development. Incentivizing the use and holding of stablecoins will result in deposit flight and seriously impair banks’ lending capabilities and ability to invest in their communities. According to the American Bankers Association, this is especially true of smaller community banks.[5] It notes that when community banks lose deposits, they must replace the funding, “often through higher-cost wholesale borrowing” and “the increased funding costs translate into less lending and higher borrowing costs for households and small businesses.”[6]
The US Treasury’s Borrowing and Advisory Committee (TBAC) estimated that as much as $6.6 trillion in deposits could move from the traditional finance sector into the stablecoin market.[7] The Independent Community Bankers Association (ICBA) predicts that the stablecoin market will “grow to $5 trillion, draining $1.3 trillion in deposits from community banks” resulting in drop of $850 billion in community bank lending.[8] It estimates that community banks make approximately 60% of all small business loans and 80% of agricultural loans nationally.[9]
Banks operate within a broader public policy framework designed to ensure that federally supported financial institutions help meet household, small business, and community credit needs. Stablecoin issuers may increasingly compete with banks for customer funds while operating under a very different regulatory framework.
NCRC has long advocated for requiring stablecoin companies to reinvest a portion of their proceeds into community development projects in underserved communities,[10] and encourages the Committee to include such a requirement in the market structure bill. It will create a more level playing field between banks and cryptocurrency companies and help ensure that communities continue to have the resources necessary for their continued growth and needs.
4. DeFi provisions create a loophole for illicit finance and systemic risks.
NCRC is concerned with how the January draft of the market structure bill requires a voluntary review of DeFi trading protocols. If that provision remains, it will create anti-money laundering and consumer protection potential blind spots. Many DeFi ecosystems still have companies and people who design, market, and profit from the product—through front-end websites and apps, governance control, token issuances, developer teams, or affiliated market-makers. If the bill does not clearly assign responsibility to these participants, it risks building a pathway for bad actors to move money, evade sanctions, and launder money while leaving regulators and law enforcement in the dark. A market structure framework should not reward opacity and regulatory gamesmanship that let sophisticated firms operate without the basic obligations that apply everywhere else in finance.
These gaps will also hit LMI communities first and hardest. When platforms are not required to implement meaningful safeguards, communities see more fraud, hacking losses, and scam-driven “investment” pitches. These predatory schemes are often amplified through social media and targeted at households with less room to absorb losses. NCRC supports innovation, but innovation must come with clear accountability and transparency that includes anti–money laundering controls and consumer protections where DeFi meets the real economy. These protections should include preserving the ability of state securities regulators and state consumer protection agencies, as well as the Consumer Financial Protection Bureau, to act to prevent and redress consumer and investor harms. If Congress creates a new crypto rulebook, it must not contain loopholes that weaken financial integrity or shift the costs of misconduct onto consumers and communities.
Thank you for considering our views on this important matter. If you have any questions, please contact NCRC’s Policy Director Tara Flynn at tflynn@ncrc.org.
Sincerely,
National Community Reinvestment Coalition
[1] GENIUS Act § 4(a)(11).
[2] Report: Senators Reach Deal on Stablecoin Yield, ABA BANKING J. (May 4, 2026), https://bankingjournal.aba.com/2026/05/report-senators-reach-deal-on-stablecoin-yield/ (quoting Punchbowl News).
[3] Banking Trades Statement on Crypto Market Structure Yield Language, AM. BANKERS ASS’N (May 4, 2026), https://www.aba.com/about-us/press-room/press-releases/banking-trades-statement-on-crypto-market-structure-yield-language.
[4] Report: Senators Reach Deal on Stablecoin Yield, ABA Banking J. (May 4, 2026), https://bankingjournal.aba.com/2026/05/report-senators-reach-deal-on-stablecoin-yield/.
[5] Sayee Srinivasan and Yikai Wang, The CEA Studied the Wrong Question on Stablecoin ‘Yield’ and Community Banks, ABA BANKING J. (Apr. 13, 2026), https://bankingjournal.aba.com.
[6] Id.
[7] U.S. DEP’T OF THE TREASURY, TREASURY BORROWING ADVISORY COMMITTEE PRESENTATION (Apr. 30, 2025), https://home.treasury.gov/system/files/221/TBACCharge2Q22025.pdf.
[8] Indep. Cmty. Bankers of Am., Stablecoins, Master Accounts, and National Trust Charters: Community Bankers Urge a Pause on Policies for Unaccountable Entities 4 (May 6, 2026), www.icba.org.
[9] Indep. Cmty. Bankers of Am., About Community Banking, www.icba.org.
[10] See Bakari Levy and Kevin Hill, The Need for Community Development Accountability for Stablecoin Issuers, NCRC (Jul. 14, 2025), https://ncrc.org.
