White House: Stablecoin Yield Ban Costs 6.6x What It Saves
White House Council of Economic Advisers found banning stablecoin yield would cost consumers 6.6 times more than it delivers in bank lending protection.
Key Takeaway
Stablecoin yield bans protect banks minimally while punishing consumers maximally — bad policy math.
The White House Council of Economic Advisers found banning stablecoin yield would cost consumers 6.6 times more than it delivers in bank lending protection.
The CEA's economic model shows a yield prohibition would increase bank lending by ₱125.01 billion ($2.1 billion) — a 0.02% bump against the banking system's ₱714.36 trillion ($12 trillion) loan book. That marginal gain comes at an ₱47.62 billion ($800 million) cost to consumers who would lose competitive returns on stablecoin holdings. The analysis concluded a yield ban would do very little to protect bank lending while forgoing consumer benefits.
The finding challenges claims made in congressional testimony that stablecoins drain ₱89.29 trillion ($1.5 trillion) from bank lending. Those estimates assume stablecoin reserves completely vanish from the credit system. But CEA's model, calibrated from Circle's December 2025 USDC reserve report, shows 88% of stablecoin reserves circulate through normal credit channels. Only 12% gets locked out of lending. Tether holds just $34 million in direct bank deposits against a $147 billion reserve pool — most sits in Treasury bills and money-market funds that support broader credit markets.
The GENIUS Act signed in July 2025 established federal stablecoin rules requiring one-to-one reserve backing but banned issuers from paying yield directly. By February 2026, Coinbase launched USDC Rewards through a revenue-sharing agreement with Circle, matching high-yield savings rates without technically violating the law. Proposed CLARITY Act versions would close that third-party loophole entirely.
CEA tested a scarce-reserve scenario where stablecoin growth could theoretically boost lending by $531 billion. That requires stablecoins growing six times current size while banks simultaneously drain their $1.1 trillion in excess liquidity above regulatory minimums. The White House called that combination implausible based on February 2026 reserve data.
This article was written based on reporting from Bitcoin Magazine.
