The crypto industry has reportedly proposed sharing stablecoin reserves with community lenders as it steps up efforts to win over skeptical banks.

This initiative aims to safeguard the stalled crypto market structure bill that could significantly alter the financial system.

Deposit Concerns and the Quest for Compromise

A Bloomberg report revealed that crypto firms have spent weeks trying to win over doubtful banks by offering new concessions centered around stablecoins, which have become the primary focus of disagreement.

According to sources in the report, the latest proposals include enhancing the role of community banks within the stablecoin ecosystem. One suggestion would mandate that issuers keep a portion of their reserves at these banks, while another would facilitate easier issuance of dollar-pegged digital assets.

Despite these discussions, both parties have yet to agree on any solutions, leaving uncertainties about whether the proposals will sufficiently alleviate fears of customers withdrawing deposits from banks.

A different report from analyst Geoff Kendrick warned that stablecoins could result in the loss of up to $500 billion in bank deposits within industrialized nations by 2028. This situation coincides with substantial growth in the overall digital dollar market, which, over the past year, has seen an approximate 40% increase in circulation.

Divisions Among Digital Asset Firms

Some crypto companies, however, do not support these proposals. A significant point of contention is whether platforms like Coinbase should be permitted to provide users with rewards for holding stablecoins. Traditional financial institutions argue that such rewards could entice customers away from checking and savings accounts, threatening a crucial source of their deposits.

In an effort to address these issues, the Trump administration convened a meeting on Monday at the White House with crypto and banking trade groups; however, the discussions concluded without any consensus on the core issues.

Nevertheless, this development is perceived positively, indicating that the market structure bill may continue to progress in Congress. This follows the bill’s passage by the House of Representatives last year, which has since stalled in the Senate amid unresolved conflicts between the sectors.

In a recent interview with Fox News, Tim Scott expressed optimism about finding a compromise:

“We can protect consumers and community banks while still allowing innovation and competition to lower prices and expand access. Both sides are working toward a compromise that keeps innovation here in America.”