A report from the White House Council of Economic Advisers, a three-member agency within the Executive Office of the President, concludes that prohibiting yield on stablecoins would produce minimal benefits for bank lending while generating measurable economic harm. The agency, which advises the president on economic matters, published its findings on Wednesday. The report directly challenges arguments made by banking groups that stablecoin yields pose a serious threat to traditional lending activity.
Under the report’s baseline scenario, redirecting funds from stablecoins back into bank deposits would increase total bank lending by approximately $2.1 billion, representing about 0.02% of the $12 trillion loan market. Community banks would see even smaller gains, with lending rising by roughly $500 million, or around 0.026%. The report notes that producing lending effects in the hundreds of billions would require simultaneously assuming the stablecoin market share increases sixfold, all reserves shift into segregated deposits, and the Federal Reserve abandons its ample-reserves framework.
The potential costs of a yield ban appear significantly larger than any lending gains. The report estimates a net welfare loss of approximately $800 million per year, driven primarily by users losing access to returns on their stablecoin holdings. The cost-benefit ratio stands at roughly 6.6, indicating that economic costs would far outweigh any incremental increase in lending activity.
The findings emerge amid an ongoing dispute between the banking sector and the crypto industry over stablecoin yields. Banking organizations, including the Independent Community Bankers of America, have warned that stablecoin yields could meaningfully reduce bank lending. Crypto industry groups have rejected that position, and the White House report appears to lend support to their argument.
The legislative backdrop adds further complexity to the debate. In July 2025, President Donald Trump signed the GENIUS Act into law, which prohibits stablecoin issuers from paying interest or yield directly to holders. However, the law still permits third-party platforms such as exchanges to offer yield on stablecoins, leaving a regulatory gap. The proposed Digital Asset Market Clarity Act could address that gap by clarifying whether yield restrictions should apply broadly or be permitted under specific conditions.
The US House of Representatives passed the CLARITY Act on July 17, 2025, but progress in the Senate has stalled. Senate Banking Committee Chair Tim Scott delayed a planned markup session in January, and no new date has been scheduled. The unresolved question of stablecoin yield is cited as a key sticking point in reaching agreement among lawmakers.
Coinbase chief legal officer Paul Grewal said last week that the CLARITY Act may be approaching a markup hearing in the Senate Banking Committee, with legislators reportedly close to agreement on several core provisions. He indicated that forward momentum depends on resolving the disagreements surrounding stablecoin yield. The White House report may factor into those deliberations as Congress weighs the economic trade-offs of further restricting yield-bearing digital assets.
Originally reported by CoinTelegraph.
