The Association of Military Banks of America (AMBA) has joined a broad coalition of national banking and credit union trade associations in a joint CEO letter urging the U.S. Senate to close a critical legal loophole that could significantly reduce local lending across the country.
The letter, signed by the chief executives of organizations representing thousands of community financial institutions, warns that allowing yield, rewards, or other interest-like inducements on payment stablecoins threatens to drain trillions of dollars in deposits from lending institutions. According to estimates cited in the letter, as much as $6.6 trillion in bank deposits could be at risk if such practices continue unchecked, weakening the ability of institutions to provide home loans, small business financing, and agricultural credit.
“Every deposit supports real lending in real communities, including those that serve our nation’s service members and veterans,” said Omuso George, President and CEO of AMBA. “Allowing payment stablecoins to function as investment or deposit substitutes undermines the safety, soundness, and local lending capacity of the regulated financial system. AMBA is proud to stand with our fellow trade associations in urging Congress to act decisively to protect consumers and community credit.”
The joint letter calls on Congress to codify a comprehensive ban on stablecoin inducements, whether offered directly by issuers or through affiliated platforms, to ensure stablecoins remain payment instruments rather than stores of value. Maintaining strong bank deposits is essential to preserving financial stability and access to credit, particularly for military families and the communities that support them.
A copy of the full letter is available here