White House Research Supports Crypto's Stance on Stablecoin Yields in Dispute with Bankers

A recent report released by the White House challenges the banking sector's claims that stablecoin yields would lead to a decline in deposits and a subsequent decrease in lending to households and small businesses. The analysis, conducted by the Council of Economic Advisers, found that banning stablecoin rewards would have a negligible impact on credit creation.

The report, which examines the GENIUS Act, warns that proposed updates to the Digital Asset Market Clarity Act could be counterproductive. The economists behind the report argue that a yield prohibition would do little to protect bank lending, while also depriving consumers of competitive returns on stablecoin holdings. The report marks the latest development in the ongoing conflict between the US banking industry and the cryptocurrency sector, which has stalled digital asset legislation in Congress. The findings could undercut a core argument made by banking groups, which claim that a full ban on stablecoin yield would increase lending.

The report suggests that the prohibition would do little to protect lending, while stripping consumers of competitive returns. The American Bankers Association argues that if stablecoins begin offering yields comparable to high-yield savings accounts, depositors will move money out of banks and into digital dollars, reducing the funds banks use to make loans. However, the White House economists contend that the bankers' argument misunderstands how stablecoins interact with the broader financial system.

The report estimates that community banks would account for just 24% of any incremental lending under a yield ban, and notes that stablecoin activity is already concentrated among large financial institutions. The economists argue that the answer lies not in the level of deposits, but in their composition, and that the shifts between banks do not force lenders to shrink their balance sheets. The report concludes that the policy delivers minimal benefits to the very institutions it is often framed as protecting, and that the costs fall on consumers, who would give up yield without receiving meaningful improvements in credit availability in return.