White House economists just dropped a major report that challenges months of heated debate between banks and the crypto world. Their analysis shows banning yields on stablecoins would barely help traditional lending. This finding comes as lawmakers work to finalize key digital asset rules.
CEA Study Delivers Clear Verdict
The Council of Economic Advisers released its report on April 8. It examined whether letting stablecoin holders earn yields would pull deposits away from banks and hurt lending. The results are straightforward.
Prohibiting stablecoin yield would boost overall bank lending by just 0.02 percent at baseline estimates. That equals about $2.1 billion in extra loans across the entire system. Large banks would handle most of it. Community banks with under $10 billion in assets would see only $500 million more in lending, or a 0.026 percent rise.
The economists built a model using real Federal Reserve and FDIC data. They tested how money moves when people choose stablecoins over bank accounts. Funds placed in stablecoins often stay within the banking system through reserves held at regulated institutions or investments in short-term Treasuries.
Even when they stacked extreme assumptions, the impact stayed limited. In the worst-case scenario, banning yields might add $531 billion in lending, a 4.4 percent increase from late 2025 levels. That would require the stablecoin market to grow six times larger relative to deposits, all reserves locked in cash instead of lendable assets, and major changes at the Federal Reserve. Under those unlikely conditions, community bank lending would rise by $129 billion, or 6.7 percent.
Here are the report’s main takeaways:
- Baseline lending gain: $2.1 billion
- Community bank share: 24 percent of the small increase
- Net welfare cost of a ban: $800 million
- Cost-benefit ratio: 6.6 to 1 against the prohibition
Banks Raised Strong Concerns
Banking groups have warned for months that yield-bearing stablecoins could drain deposits. Bank of America CEO Brian Moynihan said up to $6 trillion, roughly 30 to 35 percent of commercial bank deposits, might shift out of the system. He pointed to potential harm for small businesses and consumers who rely on local lending.
The Independent Community Bankers of America echoed similar fears. They argued that allowing yields or rewards on stablecoins could cost community banks $1.3 trillion in deposits and $850 billion in loans. This would limit credit for local economies and everyday needs.
These concerns helped stall progress on broader crypto legislation. The GENIUS Act, signed in July 2025, already requires one-to-one reserves for stablecoins in safe assets like cash and short-term Treasuries. It bans issuers from paying direct interest. But debates continue over whether exchanges or affiliates can offer rewards.
Consumer Benefits Stand Out
Stablecoins currently offer holders competitive returns in many cases, often in the 4 to 5 percent range through various programs. Traditional savings accounts at many banks pay far less. The White House report notes that banning these options would hurt everyday users seeking better returns on their digital dollars without delivering meaningful protection for bank lending.
The analysis highlights that stablecoin growth has not drained the system overall. Much of the money circulates back through Treasury holdings and banking channels. This setup supports efficient payments while keeping funds connected to the traditional financial system.
Former CFTC Chairman Chris Giancarlo has stressed another angle. Banks themselves need clear rules more than ever to invest confidently in new technology. Regulatory uncertainty slows innovation on both sides.
Implications for Crypto Rules
The report arrives at a key moment. The GENIUS Act provided the first federal framework for payment stablecoins. Now attention turns to the CLARITY Act, the market structure bill that has passed the House but faces delays in the Senate. Yield questions remain a sticking point in negotiations.
With the stablecoin market sitting around $310 billion to $320 billion, growth continues steadily. Transaction volumes have reached trillions annually, showing real-world use in payments and transfers. The CEA findings suggest stablecoins can expand without threatening bank stability.
Policymakers now have fresh data to weigh. A yield ban offers little upside for lending while costing consumers in lost opportunities. The report urges focusing on practical outcomes rather than worst-case fears.
This moment feels like a turning point for digital finance. Everyday people want simple, secure ways to hold and move money that earn fair returns. Banks seek to protect their role in the economy. Smart rules can support both without unnecessary restrictions.
