White House Council of Economic Advisers: Stablecoin Yields Will Not Threaten Small Banks

On April 8, the White House Council of Economic Advisers (CEA) released an analysis report noting that banning crypto firms from offering yields on stablecoins would have minimal impact on small and community banks’ deposit and lending operations. Economic modeling shows that even if the ban takes effect, total bank lending would rise by just 0.02%—roughly $21 billion—while community bank lending would see a mere 0.026% uptick (around $5 billion). Even under a worst-case scenario where the stablecoin market expands sixfold, community bank lending would climb by only 6.7% (some $129 billion)—far from the banking industry’s prior warnings of “disastrous” outcomes: $13 trillion in deposit outflows and an $850 billion drop in lending. The report directly pushed back against concerns from banking industry lobbying groups over stablecoin yield products, stating stablecoins do not pose a significant threat to traditional banks. Currently, the U.S. Congress’s “Cryptocurrency Market Structure Act” (known as the CLARITY Act, which addresses stablecoin regulation) is deadlocked: banking groups are pushing for limits on stablecoin yields, while the crypto industry is calling for a clear legal framework. The CEA’s conclusions could influence upcoming legislative debates.