President Donald Trump expects Congress to pass the Digital Market Clarity Act of 2025 by July 4. The legislation would provide a framework for the regulation of cryptocurrency and other digital assets. But banking groups say, as currently written, it could allow some stablecoin issuers to pay rewards that look like yield. Banking groups are concerned that would potentially result in deposit flight from traditional financial institutions and limit their ability to lend money.
Complicating matters, many stablecoin providers that stand to benefit from the increased use of digital assets have already obtained conditional approval for national trust bank charters from the Office of the Comptroller of the Currency and are also seeking access to the Federal Reserve’s payment rails. All of this is creating new competition for community-based financial institutions.
Chris Nichols, director of capital markets for SouthState Bank, a subsidiary of $68 billion SouthState Bank Corp., based in Winter Haven, Florida, has been researching the issue of digital assets for years. Although there’s not a huge wave of customers demanding stablecoin, he believes that traditional financial institutions cannot sit on the sidelines. At May’s S&P Global Market Intelligence Community Bankers Conference 2026, Nichols made that case to more than 100 bank executives and board directors. “I think every bank, in their strategic plan, if you haven’t done so already, has to say, ‘Do we need to get in the tokenized world and have a digital asset strategy? And if so, what does that look like?’” he said.
Nichols sat down for an interview with FinXTech to talk about how banks can compete with those stablecoin providers obtaining national trust bank charters, and how long they have to make a move on digital assets.
The interview has been edited for brevity, clarity and flow.
FinXTech: There are a lot of fintechs and crypto companies that have already received conditional approval for national trust bank charters, and many are going to be issuing stablecoins. What is the impact on banks from a competitive standpoint?
Nichols: I believe banks are in a position to take the best of both worlds. Circle Internet Group and others now have OCC trust bank charter approvals, so now I have to compete against them. I don’t know if I want to compete in their backyard with their strength. But banks can compete on privacy. If you use Circle stablecoin and you use their platform, everything is publicly available. As a customer, I may not want that. A bank is good at protecting privacy. On a permissioned, private blockchain, I can now do that. That gives me a competitive advantage. So, I believe banks will have to evolve to be more like Circle, but Circle will also evolve to be more like a bank to capture some of the bank’s customers. Circle and Tether’s customers have not been the traditional bank customers. And so, there’s that marriage there that I think has to occur.
FinXTech: Are banks going to have to go out to their customers and say, “We’re doing this?” Because, what we have been hearing from bankers is that their customers aren’t asking for stablecoin.
Nichols: That’s right. So you have two schools of thought on that. One, a bank has to make a decision whether they make it invisible for the customer. So, you don’t have to show any of this to the customer. If you just ask the customer if they want to send a payment, the bank will decide how best to send a payment. They may want to send it through the instant payment rails. They may want to send it through a tokenized deposit rail or a stablecoin rail, depending on the amount, who it’s going to, what time of day you send it, etc. So, you can make it completely invisible. Alternatively, a bank may want to play up the attributes of a digital asset and say, “Listen, move your money into a tokenized account. Here are the attributes. These are the benefits that you get.” And then make it a competitive product offering.
FinXTech: Are banks in a “do-or-die” situation on stablecoin?
Nichols: It depends what time horizon you’re talking about. I believe it’s do or die over the next 10 years. I believe you’ll see movement in the next two to three years. And I think that you’ll be at a significant material disadvantage if you’re a bank that doesn’t offer any tokenization, But I believe that you can survive just fine for the next two, three, five years without a platform.
FinXTech: So, there seems to be a window here that will give banks an opportunity to see how some of the early adopters do?
Nichols: Yeah, although I will say that I think there’s a significant first-mover advantage here to capture the hearts and minds of customers. And that advantage, in terms of just having that token conversation with some of your customers, will get you more treasury management business. It will get you more deposit accounts opened. Customers having that conversation with a forward thinking bank will separate that bank from others.
FinXTech: A recent report on The Stablecoin Market Landscape, published by S&P Global Market Intelligence, states that only 12% of consumers know what stablecoin is. So, is it just something that presents an opportunity for business banking, not consumer banking?
Nichols: Customers aren’t asking for it and aren’t breaking down our door for this. However, once banks show them the possibilities, the benefits of what a tokenized world looks like, whether that’s a smart contract or cheaper and faster payments, I believe they’ll be attracted to the attributes. So, that 12% is going to grow significantly.
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