Washington, April 9 (NationPress) An economic analysis from the White House indicates that a ban on yields from stablecoins would have minimal impact on enhancing bank lending. This finding counters a primary argument presented by traditional banking institutions in the ongoing discourse surrounding digital currencies.

The report by the Council of Economic Advisers (CEA) reveals that the removal of yields associated with stablecoins would only increase lending by approximately $2.1 billion, translating to around 0.02 percent. However, it would also incur a net welfare cost of $800 million.

These insights emerge at a time when regulators are contemplating stricter regulations on stablecoins under the GENIUS Act, which was enacted in July 2025. This legislation mandates issuers to maintain a one-to-one reserve for their tokens and prohibits them from providing interest directly to holders.

The White House study stated, “Strengthening bans on stablecoin yields may stem from fears that attractive stablecoin returns could siphon deposits from banks, thereby limiting their lending capabilities. Our model indicates that this risk is quantitatively insignificant.”

Banking institutions have raised alarms that permitting stablecoins to generate returns might lead to a decline in traditional deposits, undermining their lending potential. Conversely, advocates for cryptocurrency assert that such offerings promote innovation and enhance competition.

The CEA's findings imply that the overall effect on lending remains limited. A transition away from stablecoins following a yield ban could redirect about $54 billion into traditional deposits, but only a fraction of this would result in new loans.

According to the report, the majority of stablecoin reserves are invested in vehicles like Treasury bills, which eventually reintegrate into the banking sector. Only a minor proportion—approximately 12 percent—is retained in bank deposits that cannot facilitate lending.

Even under the most extreme scenarios, the resulting effect is still modest. “Even under the harshest assumptions, our model predicts only $531 billion in additional total lending,” amounting to about a 4.4 percent rise, the analysis stated.

Community banks are projected to see minimal benefits, accounting for 24 percent of any potential increase in lending, or about $500 million, roughly equivalent to a 0.026 percent increase.

“In conclusion, a yield ban would have a negligible effect on safeguarding bank lending while also sacrificing the advantages consumers could gain from competitive stablecoin returns,” the report emphasized.

This report could influence ongoing legislative discussions in Congress, where lawmakers are debating the potential expansion of restrictions on stablecoin yields through initiatives like the CLARITY Act.

Stablecoins—digital assets tied to the US dollar—have surged in popularity and are extensively utilized for transactions and savings, especially beyond the borders of the United States. The market is currently valued at around $300 billion.