While $78.3 million in net outflows over 13 months may seem modest in absolute terms, community banks are concerned because of the multiplied economic impact on their lending capacity. Community banks hold $4.9 trillion in deposits that fund 60% of the nation's small business loans under $1 million and 80% of agricultural lending. Even modest deposit losses carry a multiplied impact on the credit available to the communities these banks serve. Additionally, if the patterns observed in the 53-bank study hold nationally, over 3,500 of America's 3,950 community banks could have similar customer activity flowing to Coinbase. The concern is amplified by the yield differential: with national average savings account yields at just 0.39%, Coinbase offers up to 5% on USDC, creating a structural incentive for deposit migration that could accelerate if regulatory loopholes remain open.

The CLARITY Act is legislation currently being negotiated in Congress that would determine whether crypto exchanges and stablecoin platforms can officially pay yield on digital asset holdings. Banks oppose the current practice where Coinbase characterizes yield payments as a 'customer loyalty program' to avoid the GENIUS Act's prohibition on interest. The Independent Community Bankers of America has launched an aggressive campaign urging Senators to ban stablecoin yields entirely, claiming stablecoins could drain $1.3 trillion from community bank deposits and slash lending by $850 billion. Crypto exchanges argue that stablecoins provide consumers with better yield opportunities than traditional banks currently offer. The disagreement centers on whether allowing exchanges to pay yield on digital assets would unfairly compete with banks' deposit-taking business and harm local lending to small businesses and agricultural borrowers.