White House Economists Challenge Banks’ Claims on Stablecoin Yield

According to the analysis, prohibiting stablecoin yield products would produce only a marginal increase in bank lending, raising it by roughly 0.02%, or about $2.1 billion.  For community banks specifically, the effect would be even smaller, amounting to approximately $500 million in additional lending, or a 0.026% increase.

The findings directly challenge claims from banking trade groups that stablecoin yield products could trigger large-scale deposit flight. The Independent Community Bankers of America, for example, has warned that banks could lose as much as $1.3 trillion in deposits if yield-bearing stablecoins are permitted.  The CEA’s modeling suggests those concerns are overstated, even under aggressive assumptions about market growth.

The report also evaluates the broader economic trade-offs of a prohibition. While banning stablecoin yield would slightly boost bank lending, it would come at a net welfare cost of approximately $800 million, reflecting lost consumer benefits from competitive returns on digital dollar holdings.  The report’s authors conclude that the conditions required for such a ban to produce meaningful positive effects are “implausible,” reinforcing the view that restrictions would do little to strengthen the traditional banking system.

The timing of the report is significant. It lands in the middle of an escalating policy dispute involving banks, crypto firms, and the Trump administration over the future of stablecoin regulation. As reported by Decrypt, the debate over whether crypto companies should be allowed to offer yield on stablecoins has become the primary sticking point in negotiations over the CLARITY Act, a broader market-structure bill intended to define regulatory oversight of digital assets.

Related: IMF Highlights Risks From Tokenized Finance and Stablecoins in New Report

President Donald Trump has publicly sided with the crypto industry in that dispute, accusing major banks of attempting to undermine digital asset innovation and urging Congress to move quickly on legislation.  His intervention reflects a broader administration effort to position the U.S. as a global leader in digital assets, including through the previously enacted GENIUS Act, which established a federal framework for payment stablecoins.

Banks, however, have pushed back forcefully. JPMorgan CEO Jamie Dimon has argued that firms offering stablecoin yield should be regulated as banks, warning that unequal treatment could destabilize the financial system.  That position has resonated with banking lobbyists, who view yield-bearing stablecoins as direct competitors to deposit accounts.

The CEA report complicates that narrative by suggesting the competitive threat is limited. Even under a “worst-case” scenario in which the stablecoin market expands sixfold, the report finds that community bank lending would increase by just 6.7% if yield were banned—far below the catastrophic scenarios outlined by industry groups.

For policymakers, the analysis could prove influential as Congress weighs next steps. The CLARITY Act remains stalled, in part because of disagreements over stablecoin yield provisions, while related legislation continues to face a narrowing legislative window ahead of upcoming elections.

By framing the issue in economic rather than political terms, the White House economists have effectively narrowed the scope of the debate. The question is no longer whether stablecoin yield poses an existential threat to banks, but whether restricting it is justified given its limited impact on lending and its measurable cost to consumers.

That shift could recalibrate negotiations in Washington, where the balance between financial stability, competition, and innovation remains unresolved.