A White House economic study revealed that prohibiting yield on stablecoins would have minimal impact on increasing bank lending, contrary to traditional banks’ claims. The Council of Economic Advisers’ analysis indicated that eliminating stablecoin yield would only result in a $2.1 billion increase in lending, equivalent to about 0.02 percent, while incurring a net welfare cost of $800 million. This finding emerges amidst discussions on imposing stricter regulations on stablecoins under the GENIUS Act, enacted in July 2025, which mandates issuers to maintain one-to-one reserves and prohibits them from offering interest to holders.
The study highlighted that concerns about stablecoin returns drawing deposits away from banks and reducing lending are quantitatively small. While banks have expressed fears that allowing stablecoins to offer returns could weaken their lending capacity by diverting deposits, crypto advocates argue that such products foster innovation and competition. The report also noted that most stablecoin reserves are invested in assets like Treasury bills, with only a small portion, approximately 12 percent, held in bank deposits not available for lending.
Even under extreme scenarios, the study projected a modest impact, estimating a potential $531 billion increase in aggregate lending, equivalent to a 4.4 percent rise. Community banks are expected to experience limited gains, representing 24 percent of any lending increase, approximately $500 million, or a 0.026 percent growth. The study concluded that a ban on stablecoin yields would offer minimal protection to bank lending while forfeiting the consumer benefits of competitive returns on stablecoin holdings.
The study’s findings could influence ongoing deliberations in Congress, where lawmakers are contemplating expanding restrictions on stablecoin yields through proposals like the CLARITY Act. Stablecoins, digital tokens pegged to the US dollar, have seen rapid growth and widespread use for payments and savings, particularly outside the United States, with the market estimated at around $300 billion.
