White House Crypto Meeting Sparks Banking Industry Alarm

The White House crypto talks have raised alarm among banking groups, which have cautioned that the stablecoin laws may cripple local lending and spearhead deposits of small-town banks.

A joint statement by five larger banking trade groups came after the meeting with the White House regarding the structure of cryptocurrency markets on Tuesday.

It was attended by the American Bankers Association, Bank Policy Institute, Consumer Bankers Association, Financial Services Forum, and Independent Community Bankers of America.

The banking coalition thanked the administration as they got their view on board. They focused on securing local lending to families and small businesses. The groups emphasized financial system safety and health.

Crypto vs. Banks: Clash of Strategies

According to Brendan Pedersen on X, the meeting unveiled sharp contrasts between the industries. Crypto representatives were ready with certain solutions to yield using stablecoins, and banking trade representatives did not insist on discussions and offered no separate solutions.

Folks in the room of WH crypto-bank meeting have told me the two industries had very different approaches to initial negotiations.

Crypto reps wanted to talk specific potential solutions on yield. Bank trade reps mostly avoided details, did not want to discuss discrete solutions

— Brendan Pedersen (@BrendanPedersen) February 2, 2026

Source: BrendanPedersen

The comparison was made of the deep rifts regarding digital asset laws. Banks seek insurance to safeguard the old deposit methods of lending. Bitcoin supporters advoc on stablecoin systems with interest.

Stablecoin Threat to Community Lending

Banks’ conglomerates have become fierce opponents of interest-earning stablecoins. A recent study by ICBA cautions that this type of legislation would cut the community bank lending by $850.billion. The worry is about deposits that flow out of banks into stablecoin websites.

Conventional banks depend on deposits to finance local business loans. This source of funds may be drained away by interest-bearing stablecoins. Deposit flight is especially susceptible to community banks.

The banking coalition issued several research articles about stablecoin risks. BPI published reports with the titles Stablecoin Risks: Some Warning Bells and The Risks of Allowing Stablecoins to Pay Interest. Opinions in joint letters called on Congress to seal loopholes in stablecoins.

Banking leaders informed the White House officials that the legislation had to shield local lending. They vowed to collaborate with the legislators in consideration of the digital-asset policy. The sector signifies property worth 25.1 trillion and spreads 13.2 trillion worth of loans.