White House Finds Stablecoin Yield Ban Adds Just 0.02% to Bank Lending

• White House says stablecoin yield ban would lift bank lending by just 0.02%.
• Report finds stablecoins shift deposits within the system, rather than draining liquidity from banks.
• Policymakers view stablecoins as part of finance, not a direct threat to bank lending.

A new report from the White House’s Council of Economic Advisers (CEA) found that banning yield on stablecoins would have only a marginal effect on traditional bank lending.

The report was published on April 8, 2026, via the official White House webpage. It directly challenges claims from banking groups that interest-bearing stablecoins could significantly drain deposits from the financial system.

Yield Ban Adds Just 0.02% to Bank Lending

At the center of the analysis is the GENIUS Act, signed into law in July 2025. The law requires stablecoins to be fully backed one-to-one with reserves and prohibits issuers from offering interest or yield to holders.

According to the CEA’s model, eliminating stablecoin yield would increase bank lending by just $2.1 billion, representing a 0.02% rise in total lending. Most of that increase would come from large banks. Community banks would account for a smaller share.

Even under extreme and unlikely assumptions, such as the stablecoin market growing sixfold and reserves being locked entirely in non-lendable cash, the total increase in lending would reach $531 billion, or about 4.4%. However, the report notes that such conditions are “implausible.”

The conclusion is that restricting yield does little to boost lending capacity, making a case for yield-bearing stablecoins.

Stablecoins Reshape Deposits, Not Destroy Them

Meanwhile, the report explains that stablecoins do not necessarily remove money from the banking system. Instead, they change how deposits are distributed and used.

When users convert dollars into stablecoins, those funds are typically redeployed into assets like short-term U.S. Treasuries or redeposited in other banks. In many cases, the total level of deposits across the banking system remains unchanged.

The real impact lies in how those deposits are treated. If stablecoin reserves are held in highly liquid, fully backed assets, they may not support lending in the same way traditional fractional-reserve deposits do. 

However, because most issuers allocate a large share of reserves to Treasuries, much of the liquidity still circulates within the financial system.

Consumer Benefits Lost With Yield Restrictions

While the yield ban aims to prevent capital flight from banks into stablecoins, the CEA argues it comes at a cost to consumers.

Stablecoins offer advantages such as 24/7 global settlement and exposure to low-risk assets like Treasury bills. When yield is passed through, often via intermediaries, users can earn returns comparable to those of high-yield savings accounts.

The report highlights that banning yield would remove these benefits without delivering meaningful gains for bank lending. It estimates a net welfare cost of about $800 million, reinforcing the view that the policy may do more harm than good.

Loopholes and the CLARITY Act Debate

Despite the GENIUS Act’s restrictions, yield-like rewards still exist through third-party arrangements. For example, platforms like Coinbase offer incentives on stablecoin holdings funded through revenue-sharing agreements with issuers.

This has become a key issue in ongoing legislative discussions around the proposed CLARITY Act, which could either ban such third-party rewards entirely or formalize them within the regulatory framework.

The outcome remains uncertain, as disagreements between the crypto industry and banking lobby have delayed progress.

Banking Lobby vs White House

The CEA’s conclusions stand in sharp contrast to projections from banking groups such as the Independent Community Bankers of America, which warned that stablecoins could lead to losses of up to $1.3 trillion in deposits and $850 billion in loans if yield-bearing products are allowed.

However, the White House-backed analysis dismisses those fears as exaggerated. It stressed that stablecoins won’t significantly disrupt lending due to how they work and current policy conditions.

Ultimately, the report highlights that policymakers now see stablecoins as part of the financial system rather than a direct threat to banks.

Related: Ripple Predicts $33T Stablecoin Volume at XRP Tokyo 2026