A newly released White House report challenges the banking industry's claims that stablecoin yields would lead to a decline in deposits and lending to households and small businesses. Instead, the analysis found that banning these rewards would have a negligible effect on credit creation. The report, based on a stylized economic model and data from the Federal Reserve and FDIC, warns that restricting 'yield-like' rewards from intermediaries could be counterproductive. The study's findings are significant in the ongoing conflict between U.S.
banks and the cryptocurrency industry, which has stalled digital asset legislation in Congress. The report suggests that a yield prohibition would do little to protect bank lending, while depriving consumers of competitive returns on stablecoin holdings. The White House economists argue that the conditions for a positive welfare effect from prohibiting yield are implausible, and that the policy would deliver minimal benefits to the institutions it aims to protect. The report also reinforces the crypto industry's arguments, estimating that eliminating yield would reduce returns on dollar-based assets and carry a net welfare cost for users.