Economic advisors to the White House have indicated that interest-bearing stablecoin products are unlikely to have a significant impact on bank lending or overall credit market conditions. Their assessment comes at a time when the US Congress is weighing new regulations for yield-bearing stablecoins, and as concerns circulate within the banking sector about the potential financial consequences of these new digital assets.
Key findings from the new stablecoin yield report
A report released by the Council of Economic Advisers argues that restricting yields on stablecoins would not meaningfully benefit banks. According to the report’s core scenario, prohibiting yield-bearing stablecoins would result in only a $2.1 billion increase in total credit volume—just 0.02 percent of aggregate credit. The authors emphasize that such restrictions would instead impose a net cost on consumers.
These findings challenge warnings from banks and some industry groups, who argue that interest-bearing stablecoins could drain deposits from banks and result in substantial losses to bank funding. The report asserts that the sectoral impact of stablecoin yield bans would remain quite limited, rather than triggering massive deposit shifts as suggested by bank representatives.
Bank sector pushback and regulatory process
In the US legislative arena, the proposed Clarity Act has raised the possibility of exempting periodic rewards mechanisms and intermediary-based yields from oversight. These debates have stirred unease in the banking sector, with some institutions claiming that stablecoins offering yields could spark a large-scale outflow of deposits.
The Independent Community Bankers of America have warned that yield-bearing stablecoins could lead to as much as $1.3 trillion in lost deposits and a contraction in lending volumes of up to $850 billion. Meanwhile, executives from major banks and industry analysts caution that aggressive scenarios of stablecoin adoption could yield even broader effects. Senior officials at institutions like Bank of America and JPMorgan have reiterated calls for regulatory measures specific to stablecoin products.
Banking sector officials have drawn attention to the risk that stablecoins—operating outside of traditional regulations—could create an alternative system in the ongoing competition for deposits.
Advisors at the White House, however, have offered a more measured perspective. They note that most stablecoin reserves already remain within the banking system, typically circulating back into the sector through instruments like US Treasury bills and traditional deposits.
According to the Council of Economic Advisers, roughly 12 percent of stablecoin reserves are held outside the banking sector and cannot be converted into loans. This structural reality, the report asserts, significantly limits the impact of moving deposits from banks into stablecoins.
“In summary, banning yields would not be an effective measure to safeguard bank lending; rather, it would only prevent stablecoin savers from accessing more attractive returns,” the report concludes.
Legislatively, regulatory efforts relating to stablecoins are moving forward quickly in Washington. Last year’s GENIUS Act mandated one-to-one reserve holdings for stablecoins and prohibited issuers from offering direct yields. The FDIC has introduced a new framework to oversee stablecoin issuers, while industry representatives report that negotiations surrounding the Clarity Act are entering their final stages.
