White House CEA: Stablecoin yield ban barely helps bank lending

The White House Council of Economic Advisers (CEA) published a 21-page analysis arguing that banning stablecoin yield under the CLARITY Act would do little to protect bank lending. The CEA projects traditional lending would rise by only about 0.02% (roughly $2.1B), with 76% of the benefit going to large banks rather than community lenders. It also estimates a net welfare loss of around $800M, implying consumer returns would be hit more than the financial system would gain. CEA’s core claim is that when consumers buy stablecoins, funds are typically routed into Treasury bills and then redeposited into the banking system, leaving aggregate deposits broadly unchanged even if stablecoin yield is restricted. In an extreme scenario—stablecoins growing sixfold and reserves becoming effectively unlendable—the lending boost from a stablecoin yield ban reaches just 6.7%, which the report calls implausible. Coinbase’s CPO Faryar Shirzad welcomed the findings, while banking industry groups pushed back, saying the model may misread how deposit flows return to banks once they shift from lendable deposits into reserves. Traders are watching whether this White House-backed stablecoin yield economic rebuttal can keep momentum for the Senate Banking Committee markup scheduled for late April, ahead of a potential May window.