White House economists found that prohibiting yield on stablecoins would do little to boost bank lending — adding roughly $2.1 billion, or 0.02%, to a $12 trillion loan market — while costing holders an estimated $800 million a year in lost welfare.
Stablecoin Yield Ban Impact
The report from the Council of Economic Advisers, the three-member advisory body within the Executive Office of the President, examined what would happen if funds currently held in stablecoins shifted back into bank deposits.
The conclusion was blunt: the lending gains would be negligible.
Under the baseline scenario, total bank lending would rise by about $2.1 billion. Community banks would see even less — roughly $500 million in additional lending, or about 0.026%.
The findings land in the middle of an ongoing fight between the banking industry and the crypto sector. Groups like the Independent Community Bankers of America have argued that stablecoin yields threaten to drain deposits. Crypto industry advocates have dismissed those warnings.
The report's cost-benefit ratio was stark.
At 6.6, the economic costs of a ban would far outweigh any lending benefit, the economists concluded. "Producing lending effects in the hundreds of billions requires simultaneously assuming the stablecoin share sextuples, all reserves shift into segregated deposits, and the Federal Reserve abandons its ample-reserves framework," the report states.
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Coinbase CLO on CLARITY Act
The stablecoin yield question is central to the broader legislative debate in Washington. In Jul. 2025, President Donald Trump signed the GENIUS Act into law, which bars stablecoin issuers from paying interest or yield to holders directly. Third-party platforms such as exchanges can still offer yield.
The proposed Digital Asset Market Clarity Act could close that gap by defining whether yield should be restricted across the board or permitted under certain conditions.
The U.S. House of Representatives passed the CLARITY Act on Jul. 17, 2025, with a bipartisan 294–134 vote. But the bill has stalled in the Senate. Senate Banking Committee Chair Tim Scott delayed a planned markup in January, and it has yet to be rescheduled.
Last week, Coinbase chief legal officer Paul Grewal said the bill could be nearing a markup hearing, with lawmakers close to agreement on key provisions. He noted that progress depends on resolving the stablecoin yield dispute.
GENIUS Act and CLARITY Act Context
The two laws address different parts of the same regulatory puzzle. The GENIUS Act created the first federal framework for stablecoins, requiring one-to-one reserve backing with liquid assets such as U.S. Treasuries and explicitly excluding stablecoins from securities and commodities definitions.
The CLARITY Act, still working through the Senate, would establish broader market structure rules for digital assets, dividing oversight between the SEC and CFTC. The Senate Agriculture Committee advanced its version on Jan. 29, 2026, but the Banking Committee has not completed its markup. Senators Thom Tillis and Angela Alsobrooks reached a compromise on stablecoin yield language in late March, banning passive yield on balances while permitting activity-based rewards. Industry reaction has been mixed, with Coinbase expressing concern the text favors banks. Analysts warn that if the Banking Committee does not clear the bill by late April, passage before the November 2026 midterms becomes unlikely.
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