A 21-page analysis from the White House Council of Economic Advisers has changed the terms of the Senate fight over stablecoin yield. The report says banning yield on stablecoins would increase traditional bank lending by about $2.1 billion, or just 0.02% of total loans. That cuts directly against the banking industry’s main case for restricting the product.
The report also says about 76% of that limited gain would go to large banks, not the community lenders that have been central to the lobbying push. By the CEA’s estimate, a prohibition would create a net welfare loss of roughly $800 million, meaning the cost to consumers would outweigh any benefit to the financial system. Its conclusion was blunt: a yield ban would do very little to protect lending while giving up the consumer benefit of competitive returns on stablecoin balances.
CEA model says funds largely recycle back into the banking system
The Bloomberg-cited study was calibrated with Federal Reserve and FDIC data on deposits, lending, and bank liquidity. It also used stablecoin industry disclosures and academic estimates of how consumers shift money between assets. The central finding is that when consumers buy stablecoins, those funds are usually reinvested into Treasury bills and then redeposited into the banking system, leaving aggregate deposit levels largely unchanged whether yield is allowed or not.
The report also challenges the larger loss estimates circulated by banking groups. The Independent Community Bankers of America had projected deposit losses as high as $1.3 trillion. The CEA said such figures were not plausible. Even in an extreme scenario where the stablecoin market expanded by 6x, reserves became unlendable, and the Federal Reserve abandoned its current framework, the lending increase from a ban would only reach 6.7%. The report says those assumptions are unlikely to occur at the same time.
Crypto firms welcome the report while banks dispute the framing
Coinbase Chief Policy Officer Faryar Shirzad welcomed the findings and said they confirm that stablecoins are not a threat to community banks. For crypto companies, the report offers a White House-backed economic rebuttal to the banking lobby’s core argument.
Banking sources pushed back quickly. Their view is that the report understates what happens when deposits leave and later return in a different form, moving from lendable deposits into reserve assets that cannot support lending in the same way. The American Bankers Association and the Financial Services Forum said any legislative deal should support local lending to families and small businesses. That difference remains at the center of negotiations: not whether funds come back to banks, but in what form they return.
Late-April markup target still matters before the May window closes
The CLARITY Act has been stalled since January over the same dispute around stablecoin yield. The Senate Banking Committee markup is still targeted for late April. If lawmakers miss the May window, the bill could slip into the midterm cycle, where the legislative calendar tightens and bipartisan room narrows.
For Washington’s crypto debate, this is the biggest change since the markup collapsed in January. Whether it is enough to move the Senate toward a vote before May is now the question the industry is watching most closely.