Community banks prepare for digital assets amid deposit erosion fears

The Conference of State Bank Supervisors (CSBS) 2026 Annual Survey reveals that community banks are increasingly preparing for the rise of digital assets. Approximately 18% of community banks plan to launch tokenized deposit products within the next 12 months, while 16% intend to offer stablecoin solutions.

Many institutions view these digital assets as a threat to their traditional business models. The survey indicates that 60% of respondents expect stablecoins to have a moderate or significant impact on deposit erosion. This concern is underscored by Federal Reserve observations that significant net deposit drains can lead to substantial contractions in bank lending.

While some banks are currently offering these services, there is a notable trend toward exiting. Half of the banks currently offering tokenized deposits and two-thirds of those offering stablecoin solutions plan to exit these offerings within the next year. In the payments sector, adoption of FedNow is growing, with 38% of banks currently accepting payments and more planning to expand their capabilities.