(Sm)all banks should compete on technology, not fear it

John D’Agostino is Head of Strategy at Coinbase Institutional and Chris B. Kennedy is Managing Director, Strategic Technology and AI at Regions Bank

Community banks do not need to issue a stablecoin to benefit from stablecoins. But they do need to make sure their customers can use new forms of digital money without leaving the bank relationship behind.

That distinction matters. For years, smaller banks have watched customers move toward larger institutions with better apps, faster payments, and more convenient treasury services. An April 2025 Better Markets report found that banks with less than $10 billion in individual assets collectively held roughly $2.5 trillion, a total that had changed little over three decades even as the largest banks grew dramatically. That pressure on smaller banks well predates stablecoins.

Still, many bank leaders see digital dollars  as a threat to deposits, and at first glance, the concern may be understandable. Deposits fund lending and support liquidity. If a customer exchanges a bank balance for a stablecoin, the bank may lose funding and margin.

The fear isn’t irrational, but the data so far don’t support it. The American Bankers Association, citing an April 2025 Treasury Borrowing Advisory Committee estimate, warns that as much as $6.6 trillion in transactional deposits are........

© Fortune