TLDR:
- A stablecoin yield ban would cost consumers $800M while increasing bank lending by a mere 0.02% of total loans.
- Community banks would gain only $500M in additional lending, representing a negligible 0.026% rise under the yield ban.
- Even under worst-case assumptions, a yield ban pushes bank lending up by just 4.4%, far below earlier trillion-dollar estimates.
- The CEA concludes third-party yield arrangements drive competition and consumer access, not the deposit flight banks have warned about.
The White House Council of Economic Advisers (CEA) released a report on stablecoin yield prohibition, finding that banning yield on stablecoins would cost consumers $800 million.
In return, bank lending would only increase by 0.02%. The report challenges arguments made by large financial institutions that a yield ban protects community lending.
It adds new data to an ongoing policy debate around the GENIUS Act and proposed CLARITY Act provisions.
Minimal Lending Gains Fail to Justify Consumer Cost
The CEA’s findings show that eliminating stablecoin yield would add just $2.1 billion to a $12 trillion loan market. That translates to a cost-benefit ratio of 6.6, meaning consumers lose far more than banks gain. The numbers make it hard to justify a blanket prohibition on competitive stablecoin returns.
Breaking the figures down further, large banks would conduct 76% of that additional lending. Community banks — those with assets below $10 billion — would account for just 24%, or roughly $500 million. Their lending share would rise by only 0.026%, a figure the report describes as negligible.
The CEA also stress-tested its model using worst-case assumptions. These included a stablecoin market six times its current size, all reserves locked in cash, and the Federal Reserve abandoning its current framework. Even then, bank lending only rose by 4.4%.
As one industry voice noted in response, “A yield prohibition would do very little to protect bank lending while forgoing the consumer benefits of competitive returns on stablecoin holdings.” The data points in the same direction across every scenario tested.
Deposit Flight Narrative Loses Ground With New Data
The main argument for a yield ban has centered on deposit flight — the idea that stablecoins offering yield would pull funds away from traditional banks. However, the CEA report finds little evidence to support this concern at current market scale.
The GENIUS Act, signed into law in July 2025, already requires stablecoin issuers to maintain one-to-one reserve backing.
Reserves must consist of approved assets, including U.S. dollars, short-term Treasuries, and money market funds. The law also prohibits direct yield payments to stablecoin holders.
Some variants of the proposed CLARITY Act would go further by closing third-party or affiliate yield arrangements.
Critics of that approach argue those arrangements simply introduce competition and expand consumer access to better financial products.
One response to the CEA report stated: “Third-party yield arrangements do not cause deposit flight. All they do is encourage competition, bring new products to consumers, and allow stablecoins to enter new markets.” The report’s data supports that position across multiple modeled scenarios.
The CEA’s findings now shift the burden of proof back to those calling for a broad yield prohibition.
