White House economists said that stablecoin rewards are unlikely to meaningfully dent bank lending or broader credit conditions, pushing back on a banking-sector concern as U.S. lawmakers debate rules on yield-bearing tokens.

A new report from the Council of Economic Advisers found that restricting stablecoin yield would produce only marginal gains for banks. In its base case, eliminating stablecoin yield lifts lending by about $2.1 billion, or roughly 0.02% of total loans, while imposing a net welfare cost on consumers.

Competing views

The paper cuts against a growing body of warnings from banks and industry groups that stablecoins could siphon off large pools of deposits if allowed to offer competitive returns.

The findings arrive as lawmakers weigh whether to tighten language in the proposed Clarity Act to block indirect yield mechanisms — including reward programs offered through intermediaries rather than issuers. That policy debate has drawn sharp pushback from parts of the banking sector.

The Independent Community Bankers of America warned that allowing interest-bearing stablecoins could trigger as much as $1.3 trillion in deposit losses and $850 billion in reduced lending.

Other estimates cited by bank executives and analysts have gone further, pointing to multi-trillion-dollar shifts under more aggressive adoption scenarios. Senior banking figures, including executives at Bank of America and JPMorgan, have urged regulators to apply bank-style rules to stablecoin yields.

Absent traditional oversight, they argue that stablecoins could otherwise create a parallel system that competes directly for deposits.

White House economists, however, take a narrower view. They note that most stablecoin reserves exist within the banking system and are often recycled into Treasurys or deposits elsewhere.

According to the CEA, this limits the extent of any real "flight" from traditional balance sheets to stablecoins. Only a small share of reserves, estimated at around 12%, is effectively locked out of lending.

This structure dampens the impact. Even when users shift funds into stablecoins, the dollars largely reappear within the financial system, reducing the hit to credit creation. "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 states.

Stablecoin negotiations

The yield discussion has become central as Washington accelerates work on stablecoin legislation.

Regulators are already moving to implement provisions under last year’s GENIUS Act, which requires one-to-one reserve backing and bars issuers from paying yield directly. The FDIC has proposed a new framework for supervising stablecoin issuers, while industry participants say negotiations over the Clarity Act are nearing completion.