For decades, we in the West treated the Colorado River like an endless supply of life-giving water. We diverted water here and there, forgetting that it had limits. We moved it, stored it and sent it wherever politics and growth demanded, like it would never run out. Today, Lake Powell is running dry, and panic is setting in.
Now we run the same risk with the limited financial capital that keeps Utah farms and ranches running, if cryptocurrency legislation passes Congress in its current form.
Agriculture is an underappreciated pillar of Utah’s economy. Not only does Utah agriculture provide the crops and animal products that (literally) make everyday life possible, it contributes tremendously to Utah’s economy, driving over $2.3 billion in sales and employing over 16,000 people.
Between 2002 and 2022, Utah lost 1.2 million acres of farmland. Input costs keep rising. Every year, we still have to borrow the full cost of seed, feed, fuel, equipment and labor long before a single dollar of revenue comes in. For most of us, that credit comes from the community banks that have financed rural Utah for generations.
Congress is currently considering the “CLARITY Act,” legislation that could help make or break Utah’s agricultural industry.
Most of us have heard of “stablecoin,” which is a convenient means of digital payment. Last year’s GENIUS Act correctly recognized that stablecoin is a great way to make payments, but is not the same as a bank deposit. The law barred stablecoin issuers from paying interest, but a loophole in the law allows them to indirectly pay a “yield.” That “yield” will attract deposits away from traditional banks, reduce lending capacity and dramatically slow economic growth. The CLARITY Act now before the Senate can close that loophole — or leave the diversion in place.
To understand the problem, we have to understand the difference between stablecoin and deposits in a local bank. Local (community) banks are a key driver of America’s “Main Street” economy, which includes farmers and ranchers, plus smaller local businesses. Community banks take deposits and use them to make needed local loans. Without deposits, community banks can’t make the loans that keep our local economies humming. No deposits, no loans.
If stablecoin issuers are allowed to act like banks by offering interest to holders, a key source of credit for small businesses, farmers and ranchers will dry up. Stablecoin issuers do not make loans to anyone, especially small local businesses.
Community banks make roughly 80% of farm loans (close to 90% of the smallest ones) and hold about two-thirds of rural deposits. Deposits diverted into interest-bearing crypto accounts will leave local banks less to lend, drying up operating loans. Some projections put $1.3 trillion in deposits and $850 billion in lending capacity at risk nationally if the loophole isn’t closed.
We are not calling for excessive regulation. Utah has become a regional fintech hub and the U.S. must continue to lead globally. Closing the stablecoin loophole on interest is a narrow fix to the bill that would simply ensure that financial innovation does not take down farmers, ranchers and rural communities that already face an uphill climb to success.
The stablecoin industry will continue to thrive without undercutting bank lending. Coinbase alone reported roughly $1.35 billion in stablecoin-related revenue last year. What may not continue, if the loophole survives, is the quiet, reliable flow of operating capital into rural Utah.
As written, the bill unleashes an economic force that, over time, will rob Utah farmers of important credit lines and line the pockets of the crypto industry. That is why the crypto giants have put millions behind an effort to force this bill through Congress without addressing widespread concerns around interest.
Sen. John Curtis, R-Utah, has already raised this exact concern publicly, warning that stablecoin yield will pull deposits out of community banks. As negotiations in Washington move forward, we hope that Curtis will hold the line and keep pushing to tighten the bill’s language before lawmakers vote. He can stand up for Utah’s financial technology sector and its farms and ranches all at once.
Please, senator, close the loophole. Keep that money here where it is still needed. Don’t let farm lending evaporate like Lake Powell.