Washington, April 9 A White House economic study has found that banning yield on stablecoins would do little to increase bank lending, challenging a central argument made by traditional banks in the debate over digital assets.
The analysis by the Council of Economic Advisers (CEA) shows that eliminating stablecoin yield would raise lending by just $2.1 billion, or about 0.02 per cent, while imposing a net welfare cost of $800 million.
The findings come as policymakers weigh tighter rules on stablecoins under the GENIUS Act, signed into law in July 2025. The law requires issuers to maintain one-to-one reserves backing their tokens and bars them from offering interest directly to holders.
“Reinforcing prohibitions on stablecoin yield may be motivated by the concern that competitive stablecoin returns will draw deposits out of the banking system and contract lending,” the White House study said. “Our model shows that this concern is quantitatively small.”
Banks have warned that allowing stablecoins to offer returns could pull deposits away from traditional accounts, weakening their ability to lend. Crypto advocates argue the opposite, saying such products drive innovation and competition.
The CEA study suggests the overall impact on lending is limited. A shift away from stablecoins following a yield ban would move about $54 billion into conventional deposits, but only a small portion of that would translate into new loans.
The report says most stablecoin reserves are invested in assets such as Treasury bills, which flow back into the banking system. Only a small share -- about 12 per cent -- is held in bank deposits that cannot be used for lending.
Even under extreme assumptions, the effect remains modest. “Even stacking every worst-case assumption, the model produces only $531 billion in additional aggregate lending,” or about a 4.4 per cent increase, the study said.
Community banks would see limited gains. The study estimates they would account for 24 per cent of any increase in lending, or about $500 million, equivalent to a 0.026 per cent rise.
“In short, a yield prohibition would do very little to protect bank lending, while forgoing the consumer benefits of competitive returns on stablecoin holdings,” the report said.
The findings could shape ongoing discussions in Congress, where lawmakers are considering whether to expand restrictions on stablecoin yield through proposals such as the CLARITY Act.
Stablecoins -- digital tokens pegged to the US dollar -- have grown rapidly and are widely used for payments and savings, particularly outside the United States. The market is estimated at about $300 billion.
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