A new report published by the White House Council of Economic Advisers is challenging claims from the banking industry that stablecoin yields would drain deposits and restrict lending. According to the report, banning returns provided by stablecoins is unlikely to lead to a significant increase in bank lending, raising doubts about longstanding industry arguments.
Debate over stablecoin yields and legislative proposals
The analysis delves into legislative changes under consideration, including the GENIUS Act passed in July 2025 and updates to the Digital Asset Market Clarity Act, which aim to restrict or prohibit yield-based rewards on stablecoins. The report highlights that such bans, while intended to shield traditional banking, would primarily eliminate the competitive returns stablecoin holders currently enjoy. Even a complete ban on yields, the study notes, is expected to result in only minimal growth in bank lending.
Banks have argued that stablecoins offering attractive returns could encourage depositors to move their funds into digital assets, reducing banks’ capacity for lending. However, representatives from the crypto sector maintain that rewards from stablecoins do not pose a threat to the broader financial ecosystem. The White House report supports this perspective, indicating that the banks’ main arguments may not hold up under scrutiny.
Standoff between bankers and the crypto sector shapes regulation
Debate over digital asset regulations in the U.S. Congress has intensified in recent months. Disagreements between banks and cryptocurrency companies have contributed to legislative delays, complicating efforts to reach consensus. President Donald Trump and his team have been interacting with industry representatives in pursuit of regulatory compromises.
The American Bankers Association has also raised concerns about stablecoin yields’ potential effects on small banks. According to their view, as core depositors are drawn to digital assets, community banks could be harmed. Yet the White House report emphasizes that stablecoin activity predominantly takes place within large financial institutions; the tangible impact on smaller banks remains limited.
White House economic experts point out that stablecoin-related funds are frequently invested in asset classes like Treasury bills and can return to the banking sector as deposits elsewhere. This dynamic, they argue, means there is no meaningful overall change in deposit levels within the banking system.
The findings reveal that only a small portion of stablecoin reserves could potentially constrain lending. Thanks to banks’ reserve requirements and liquidity buffers, any possible impact on credit markets is largely mitigated by the existing regulatory structure.
The report further notes that claims of severe risks to small banks from stablecoin yields lack substantial evidence in practice. If a ban on stablecoin yields were implemented, the increase in small banks’ credit capacity is forecast to be only around $500 million—a comparatively modest figure in relation to the overall market.
“A yield ban would have a very limited effect on safeguarding bank lending but would force stablecoin users to forgo the competitive returns they deserve,” the report concludes.
Analysts behind the study caution policymakers to weigh both the intended and unintended consequences of restricting stablecoin rewards. They argue that short-term gains for banks may come at the cost of innovation and consumer choice.
Industry stakeholders are continuing to call for balanced regulation, insisting that fair access to competitive yields is central to the growth of digital finance. As the debate continues, dividing lines between established banks and emerging crypto entities remain prominent.
The report’s conclusions are expected to influence ongoing discussions in Congress and among industry leaders, as policymakers weigh the future of stablecoin regulation in the U.S. As legislative negotiations proceed, both sides are intensifying efforts to shape a policy framework that serves their respective interests while addressing broader economic concerns.
