Stablecoins and Community Banking: Promise, Risk, and What Comes Next

Why deposits are shifting and how community banks can respond to the stablecoin challenge

For decades, banks and credit unions have leaned on one key lifeline: deposits. Those deposits fuel lending, generate interest income, and have always been the foundation of trust between financial institutions and their customers.

But things are changing. Stablecoins, which are digital assets tied to currencies like the U.S. dollar, are starting to reshape how people hold and move money. And that shift has big implications for community banks.

How stablecoins differ from other crypto 

Unlike cryptocurrencies such as Bitcoin or Ethereum, stablecoins are designed to hold steady in value. That makes them much more practical for everyday payments, transfers, and even global commerce.

Legislation has also played a role. The GENIUS Act, which advanced new rules for stablecoin issuance and oversight, gave these digital assets more legitimacy and accelerated their adoption. With a clearer regulatory path, stablecoins have gained traction as both businesses and consumers look for faster, more efficient ways to move money.

Because they are stable, increasingly popular, and now supported by policy, stablecoins are quietly challenging the role banks have traditionally played, especially when it comes to holding deposits.

Deposits on the move

The biggest disruption comes from where people are choosing to put their money. Instead of keeping funds in bank accounts, more individuals and businesses are moving money into digital wallets.

Here’s why:

• They’re fast: Stablecoins can move across borders instantly, skipping legacy systems like SWIFT or ACH.
• They’re programmable: Stablecoins can plug into smart contracts that power lending, payments, and other financial services automatically.
• They offer rewards: Many stablecoin platforms provide attractive reward yields or loyalty incentives, which can compete with traditional savings accounts.

In other words, deposits that once sat safely inside banks are now flowing into a parallel system where banks are no longer the default option.

Stablecoin impact on banks

This shift creates several challenges for banks. With fewer deposits, institutions have less liquidity to fund lending, which strikes at the core of their business model. At the same time, if stablecoin platforms continue to offer higher yields, banks will be forced to compete, putting pressure on already thin margins. The reputational risk is also real, as customers may increasingly view banks as slower and more expensive compared to digital-native alternatives. Finally, policymakers are still deciding how to classify and regulate stablecoins, and whether to accelerate the rollout of Central Bank Digital Currencies (CBDCs), leaving banks caught in a period of uncertainty.

Stablecoin risks and limits

Beyond the impact on banks themselves, stablecoins are far from risk-free. They carry their own set of challenges that both customers and institutions need to consider.

• No deposit insurance: Unlike bank deposits, stablecoins are not covered by FDIC or NCUA insurance.

• Incomplete regulation: Oversight is still evolving, and rules around reserve management, disclosures, and redemption are uneven across issuers.

• AML concerns: Anti-money laundering controls remain a major question mark, with regulators concerned about how illicit actors could exploit these digital assets.

• Context matters: In highly developed countries with stable financial systems, the risks often outweigh the benefits. The speed of a transfer is not worth the loss of deposit protection. But in countries with double-digit inflation, strict currency controls, or shaky central banks, stablecoins can serve as a lifeline for cross-border trade or personal remittances.

• Costs: Just like any other currency, there are still costs involved in converting stablecoins back into dollars and vice versa, and those realities need to be factored into any business case.

Stablecoins are not a one-size-fits-all solution. They may be game-changing in certain niches, but they are not without risk.  Watch Acceleron CEO Damon Magnuski discuss stablecoins on the Cross-Border Rewired webinar:

How community FIs respond

This is not the end of the story for banks. While stablecoins present real risks, they also highlight areas where community banks can adapt and stay relevant. One possible path is exploring partnerships with stablecoin issuers or fintechs. In this role, banks would not compete head-on but instead provide services they already excel at, such as custody, compliance oversight, and liquidity management. These functions are critical guardrails in a space where regulation is still catching up.

Another option is to carefully integrate stablecoins into existing services, but only in ways that align with sound risk management and customer protection. For example, banks could give customers the ability to hold or transact in stablecoins alongside traditional accounts, while making clear the differences in protections and regulatory coverage. Done thoughtfully, this approach allows banks to participate in the digital economy without undermining the trust and stability they are built on.

In the works at Acceleron

At Acceleron, We are watching these developments closely and evaluating solutions that can help community banks take part in this new world of finance safely. Our team sees stablecoins as one more form of foreign exchange and another potential payment rail, not a wholesale replacement for international wires, which remain the most reliable way to send large sums under established regulations and safeguards, and a low lift source of non-interest income for community financial institutions.

Our approach is agnostic. We are not here to promote one method over another but to give community banks the tools to process transactions in whatever way their customers prefer. Whether that is dollars, euros, or digital assets like stablecoins, our focus remains on helping institutions move money safely, efficiently, and in full compliance with regulatory expectations. Stay tuned.

Acceleron is a modern correspondent banking technology platform that empowers community banks and credit unions to automate international wire transfers, capture non-interest income, and compete more effectively with big banks. With a foreign exchange (FX) marketplace and currency conversion engine, Acceleron’s API-first infrastructure helps institutions turn cross-border payment flows into efficient, revenue-generating opportunities. Serving over 200 financial institutions and facilitating more than $1 billion in international payments annually, our correspondent banking services and international payment automation solutions are pre-integrated seamlessly with Fiserv Payments Exchange, Braid, and other leading payments platforms.  

Subscribe to our monthly newsletter, "The Exchange," to stay in the know and get original content and insights you won't find anywhere else!