White House Economic Advisers Release Study On Stablecoin Yield And Its Impact On Bank Lending

The White House Council of Economic Advisers has published its long-awaited study on the potential effects of stablecoin yield on bank deposits and lending. The report examines the longstanding claim from banking trade groups that yield-bearing stablecoins could drain deposits from traditional banks and reduce lending capacity, particularly at smaller community institutions. 

According to the study, eliminating yield from stablecoins would increase bank lending by only $2.1 billion, with a net welfare cost of $800 million. This represents a negligible increase in total lending—just 0.02%—while the cost-benefit ratio of 6.6 suggests that every dollar gained in lending would result in more than six dollars lost in consumer benefit.

The study further demonstrates that large banks would account for roughly 76% of this additional lending, leaving community banks—those with assets below $10 billion—to contribute only 24%, or approximately $500 million in incremental loans. Even under the report’s most extreme, worst-case assumptions, which include a sixfold expansion of the stablecoin market relative to deposits, reserves fully held in cash rather than Treasuries, and a complete departure from the Federal Reserve’s existing monetary framework, total bank lending would rise by only $531 billion, equivalent to 4.4% of aggregate loans. Under those same implausible conditions, community bank lending would increase by just $129 billion, or 6.7%. The study concludes that the consumer benefits of stablecoin yield—access to competitive returns—would be largely sacrificed for negligible gains in traditional bank lending.

Regulatory and Legislative Context

The release of the report comes as regulators continue implementing provisions under the GENIUS Act, signed into law in July 2025. The legislation requires stablecoin issuers to maintain one-to-one reserves in specified assets, including U.S. dollars, federal reserve notes, funds held at regulated depository institutions, short-term Treasuries, Treasury-backed reverse repurchase agreements, and certain money market funds. The law also prohibits issuers from offering yield directly to stablecoin holders, though it does not explicitly ban affiliate or third-party arrangements that might provide interest-bearing products—a loophole that some variants of the proposed Clarity Act seek to close.

The Clarity Act, which would either restrict or formally authorize third-party yield mechanisms, has been stalled in Congress for several months amid intense lobbying from both the banking and crypto sectors. Companies like Coinbase, which currently offers an annual yield of 3.5% on USDC balances for select customers, have urged regulators to provide clarity, while traditional banks have pushed for stricter limitations. The White House has actively facilitated negotiations in recent months as the financial industry remains divided over the role of stablecoins and yield-bearing products. Banking trade groups argue that unrestricted yield threatens their deposit base and could reduce lending capacity, particularly for smaller institutions serving rural communities.

The stablecoin yield debate has also gained attention as crypto firms increasingly compete with traditional banking services. Senator Cynthia Lummis has encouraged banks to “embrace” stablecoins amid the ongoing legislative stalemate. Lawmakers have indicated that votes on crypto market structure legislation are approaching, with key decisions expected in April and a statutory deadline in May. Meanwhile, traditional banks are expanding into crypto custody services while lobbying against yield-bearing stablecoin offerings, reflecting a dual approach of participating in digital finance while attempting to limit competitive pressure.

Implications for Market Access and Consumer Benefits

The debate over stablecoin yield ultimately reflects a broader question of market access, innovation, and the balance of consumer interests. While prohibiting yield may protect a minimal increase in bank lending, it would also restrict access to competitive returns available through digital assets. Yield-bearing stablecoins provide households, particularly those underserved by traditional financial institutions, with the opportunity to earn returns on digital holdings, effectively democratizing financial access. Eliminating such products in order to protect a small marginal increase in lending highlights the competing interests at play, raising questions about whose priorities are being served in the regulatory process.

As policymakers move forward, they face a choice between supporting established banking institutions and enabling wider access to innovative financial products. The CEA report offers a data-driven perspective, demonstrating that the macroeconomic threat posed by yield-bearing stablecoins is minimal, while the potential benefits to consumers are significant. How Congress and regulators weigh these trade-offs will determine the future role of stablecoins within the U.S. financial system.

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