Stablecoin Yields Won't Harm Banks, White House Economists Say

A White House report assessed the potential impact of banning stablecoin yield on bank lending. The Council of Economic Advisers concluded that such a ban would have a marginal effect on lending. Specifically, the report projected a negligible increase of $2.1 billion in total bank lending, representing a mere 0.02% of the market. Community banks would see even smaller gains, about $500 million or 0.026%. This report contradicts concerns from banking groups about significant reductions in lending due to stablecoin yields. The report highlights that a ban could result in a net welfare loss of around $800 million annually due to lost yield for users. The cost-benefit ratio of the ban would be unfavorable, with costs far outweighing potential lending gains. The report suggests that achieving significant lending effects under a ban would require several extreme, unlikely assumptions. The GENIUS Act, signed in 2025, restricts stablecoin issuers from paying interest. The Digital Asset Market Clarity Act seeks to clarify whether yield restrictions should be comprehensive. The CLARITY Act passed in the House, and a Senate markup hearing may be imminent, pending resolution of yield-related disagreements.