Nate Franzen, head of agricultural finance at First Dakota National Bank, is warning that the CLARITY Act under discussion in the U.S. Senate could weaken regional banks if it allows stablecoin issuers or platforms to offer rewards or interest-like payments without strict limits. Stablecoins are digital assets designed to maintain a value linked to traditional currencies such as the U.S. dollar. Citing an American Bankers Association estimate, Franzen says as much as $4.7 billion of the roughly $47 billion deposited at South Dakota regional banks could move into stablecoins, potentially reducing those banks’ lending capacity by up to $3.7 billion. The resulting pressure could affect financing for farmers, ranchers and small businesses that rely on local banks. Unlike bank deposits, which are insured by the FDIC (U.S. deposit insurer) up to $250,000, stablecoins do not currently have comparable federal insurance guarantees. Franzen argues that the issue is not opposition to financial innovation, but the need to define rewards clearly, disclose risks and prevent new products from undermining banking stability. The legislation’s outcome could establish a federal precedent for stablecoin regulation and influence the future of local lending and community development.