The United States Senate failed Tuesday to advance the CLARITY Act, a major cryptocurrency bill intended to establish clearer rules for digital assets.

Bitcoin and major crypto stocks fell following the vote.

But one of the most important fights surrounding the bill was about banks and stablecoins.

A stablecoin is basically a digital token designed to remain worth $1.

Unlike Bitcoin, the point is not supposed to be that it increases dramatically in value.

The point is to make dollars easier to use on digital networks.

Stablecoins can move around the clock, cross borders quickly, and allow for transfers without using the traditional banking system.

There is real usefulness there.

But there is also a tradeoff.

Banks have warned Congress that stablecoins could eventually compete with traditional deposits.

That matters because banks do not simply store our money.

Banks help turn savings into credit.

Bank deposits fund loans.

Those loans do things like help people buy homes and help businesses expand.

Crypto companies have a reasonable response.

Banks should have to compete.

If stablecoins make payments faster or cheaper, consumers should be allowed to use them.

But competition is not the only thing that matters.

So does maintaining institutions capable of turning American savings into investment in the real economy.

That is particularly important for community banks in places like Mississippi.

That does not mean stablecoins are useless.

Faster payments and easier international transfers are real benefits.

But Congress should be careful about encouraging an enormous parallel financial system without considering what happens to the institutions providing credit.

There may also be a middle ground.

Banks themselves can use blockchain technology and tokenized deposits, bringing some of the advantages of digital finance into the regulated banking system.

That may not satisfy people who want cryptocurrency to remake finance.

But there is nothing backward about protecting banks.

We need banks.

New technology can make moving money faster and cheaper. And it may create competition that forces banks to improve.

But somebody still has to provide the credit that finances homes and businesses.

Whatever financial system we build next, we still need strong, reliable banks with the underwriting discipline to do that.