White House economists say stablecoin rewards pose minimal risk to banks

By Vivian Nguyen · Published April 8, 2026 · 2 min read · Source: Crypto Briefing

Photo: Caleb Perez

White House economists say stablecoin rewards pose minimal risk to banks

Even under extreme assumptions, economists find that stablecoin rewards have little effect on US bank lending, while restricting yields could reduce consumer benefits.

Add us on Google by Vivian Nguyen Apr. 8, 2026

Stablecoin rewards pose minimal risk to the banking sector, and prohibiting yields is unlikely to produce any meaningful increase in bank lending, according to a report released on April 8 by the White House Council of Economic Advisers (CEA).

The report, titled ‘Effects of Stablecoin Yield Prohibition on Bank Lending,’ comes amid an intense lobbying battle between traditional banks and the crypto industry over whether stablecoins should be allowed to pay yield to their holders.

Banks have argued that competitive returns on stablecoins would trigger roughly $6 trillion in withdrawals from deposit accounts.

According to the CEA, banning interest payments on stablecoins would produce almost no increase in bank lending while costing consumers roughly $800 million a year in lost benefits.

Some estimates have put the potential lending contraction as high as $1.5 trillion. The CEA’s model says that number is off by several orders of magnitude.

Under the report’s baseline calibration, banning stablecoin yields would boost total bank lending by only $2.1 billion (0.02%). Community banks would gain about $500 million, or 0.026% of their lending book.

With a market size of roughly $300 billion against a $17.15 trillion deposit base, stablecoins represent just 1.7% of deposits. Crucially, around 88% of reserves (as seen with Circle’s $75 billion USDC) sit in Treasury bills and repos.

These funds recirculate through the banking system rather than disappear, leaving total deposits largely unchanged, according to the CEA.

“A yield prohibition would do very little to protect bank lending, while forgoing the consumer benefits of competitive returns on stablecoin holdings,” the CEA notes.

This is a developing story.

Disclosure: This article was edited by Vivian Nguyen. For more information on how we create and review content, see our Editorial Policy.

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