A study from the White House Council of Economic Advisers says stablecoins and the yields attached to them pose little threat to bank deposits, challenging a key argument used to support restrictions on yield-bearing stablecoins. According to the report, removing interest on stablecoins would increase banks’ lending capacity by just 0.02%, or about $2.1 billion, while creating roughly $800 million in consumer welfare costs.
Even the report’s worst-case model shows limited gains for banks
The research was published after repeated requests from the US Senate Banking Committee for analysis on stablecoins. Economists modeled an extreme scenario in which the stablecoin market expanded to nearly six times its current size, reserves could not be lent out, and the Federal Reserve abandoned its current financial policies. Even under that scenario, which the report described as “implausible,” bank lending would rise only 6.7%, or around $129 billion. The study also said it found no case in which a ban on stablecoin yields produced positive welfare outcomes.
The report argued that fears of capital leaving banks for stablecoins are quantitatively small. A central reason is that most stablecoin reserves remain inside the traditional banking system, meaning those funds are still tied to bank custody and oversight in some form. The report’s conclusion was direct: a yield prohibition would do little to protect bank lending, while removing the consumer benefit of earning competitive returns on stablecoin holdings.
Coinbase backs the findings, banks remain skeptical
Coinbase executives strongly supported the White House conclusions. Chief Policy Officer Faryar Shirzad said the study aligns with earlier analyses that reached the same broad view: “Stablecoins are an opportunity and not a threat.” The statement fits the crypto industry’s long-running position that stablecoins can operate alongside existing financial institutions rather than simply draining deposit bases.
Banks, though, are still not persuaded. The report cited an insider who said that even when stablecoin reserves flow back into banks, they do not always return in the same form. That source also argued that stablecoin yields could trigger large deposit outflows, forcing institutions to overhaul lending systems in order to preserve stability.
Community support grows as the study enters the policy debate
Reaction from the broader community was largely supportive, with the study seen as strengthening the case for global stablecoin adoption at a time when usage keeps expanding. The article said the research has become a key reference point for the CLARITY Act, which is expected to receive a markup in April and move to a Senate vote in May.
The policy dispute over stablecoin yields and bank protection is still open. The White House study, though, adds a clear quantitative claim to that debate: banning yield-bearing stablecoins appears to offer only marginal support for bank lending while imposing measurable costs on consumers.