The White House Council of Economic Advisers released a formal analysis on Tuesday, concluding that allowing stablecoin issuers to pay investors a return on their holdings would only marginally displace bank lending, directly contradicting warnings from the banking industry that has stalled the Clarity Act in the Senate Banking Committee since January 2026.
The report, published on April 9, 2026, identifies the extent of the banking sector’s alleged exposure as grossly overstated, and projects that allowing stablecoin returns would increase bank lending by only $2.1 billion, roughly 0.02% of total loans outstanding, rather than sparking the systemic deposit flight that banking lobbyists have argued before Congress.
🚨Huge: Stablecoin rewards won’t hurt banks
Despite the extensive controversy surrounding the CLARITY Act and the impact stablecoins could have on US bank deposits, the prevailing narrative now points to an entirely positive outcome.
A new Bloomberg headline says…
“White House economists say… pic.twitter.com/0BSKDHvytt
-BSCN (@BSCNews) April 10, 2026
We believe that the release of the report is not primarily an academic exercise, but rather a deliberate intervention by the executive branch aimed at providing legislative cover for bipartisan yield compromise, and accelerating the path of the Clarity Act out of committee by neutralizing the empirical basis for banking industry opposition.
The issue of stablecoin yields has become a central fault line in federal digital asset regulation, with banking trade groups, cryptocurrency exchanges, and executive branch economic officials now in open disagreement over how much competitive risk yielding stablecoins pose to the deposit base of federally insured institutions.
Yield blocking, fallback architecture, and GENIUS Code baseline
Congress has spent the better part of half a decade trying to pass a framework to support the future of finance.
It’s time to @BankingGOP To keep the markup and send the CLARITY Act to President Trump’s desk.
The Senate’s time is valuable, and now is the time to act.
– Treasury Secretary Scott Bessent (@SecScottBessent) April 9, 2026
The US Stablecoin National Innovation Guidance and Establishment Act (GENIUS Act), passed in July 2025, requires stablecoin issuers to maintain a single reserve of assets, such as US dollars and Treasuries. It also prohibits issuers from passing on the revenue generated from these reserves to token holders, with the aim of preventing the exodus of deposits from federally insured banks.
However, the language of the law left open the possibility that exchanges could offer rewards tied to stablecoin balances, which Coinbase has taken advantage of with its USDC rewards product.
The CLARITY Act sought to expand the scope of the yield ban to include exchanges, prompting Coinbase to withdraw its support for the legislation and halt its progress. The Independent Community Bankers of America (ICBA) has urged Congress to uphold the ban, arguing that allowing the return would result in the loss of $1.3 trillion in deposits to small banks.
However, the CEA report challenges ICBA’s figures, forecasting a $2.1 billion increase in bank lending as a result of the yield ban. Even in extreme scenarios, the Council estimates only a $531 billion increase in lending, which would primarily benefit large banks, which would account for 76% of that increase. Meanwhile, community banks would gain about $129 billion, undermining ICBA’s claims that a yield ban would protect them.
CLARITY Act Issuer and Stock Exchange Implications: Department, Coinbase, and the Competitive Yield Premium
The results of the CEA impact the competitive position of Circle Internet Financial, Coinbase Global and Paxos Trust Company, particularly on the issue of yield. Circle’s USDC, which is primarily backed by short-term Treasuries and cash equivalents, currently allows returns to accrue only on Circle.
Legislatively allowing yield crossing could enable Circle and competitors to offer returns that rival money market funds, potentially changing USDC’s value proposition and accelerating the shifts in stablecoin market share evident in early 2026 data.
Paul Grewal, chief legal officer at Coinbase, considered the CEA report crucial, because it found no evidence that stablecoin rewards lead to deposit flight, and noted that critics had tried to suppress these findings. This interpretation of the report as a pivotal political moment reflects the cryptocurrency industry’s view of the Clarity Act, which many believe is now “practically inevitable.”
The banking industry’s concerns reflect regulatory actions following the 2008 financial crisis regarding money market mutual funds, highlighting the competitive imbalances created by yield-generating instruments outside of deposit insurance. While the CEA report acknowledges these concerns, it questions the extent of deposit migration, a key factor in Congress’s potential settlement language. Additionally, federal oversight of stablecoins interacts with emerging state regulations, further complicating implementation if Congress leaves yield policies ambiguous.
Regulator provides notice and seeks comment. A regulatory body that follows the Administrative Procedures Law. Regulated…actually regulated. I can get used to this. https://t.co/SHn8lRISJJ
– Paul Grewal (@iampaulgrewal) April 8, 2026
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Congressional Dynamics: Tillis, Albrooks, and the State of the Senate Banking Committee
The fate of the CLARITY Act rests primarily with Senators Thom Tillis (R.N.C.) and Angela Alsobrooks (D-Md.), who reached a tentative agreement with White House officials in March 2026 to address revenue disputes in the bill.
This agreement has not yet been formalized and requires input from the banking and cryptocurrency industries before advancing through the Senate Banking Committee, where it has faced delays since January. White House cryptocurrency adviser Patrick Witt noted that more work was needed on the bill’s language, leaving the timeline open.
The Senate Banking Committee’s position is further complicated by the ban imposed by the GENIUS Act, which protects members allied with banks. Any amendments to allow returns in the CLARITY Act would force committee members to vote to expand stablecoin functionality beyond the limitations set by the GENIUS Act.
While the Blockchain Association described recent discussions at the White House as a step toward bipartisan consensus, achieving actual consensus in the committee remains a challenge.
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Daniel Francis is a technical writer and Web3 educator specializing in macroeconomics and DeFi mechanics. A crypto native since 2017, Daniel brings his background in cross-chain analytics to author evidence-based reports and detailed guides. It is certified by the Blockchain Council and is dedicated to providing “information gain” that cuts through the market noise to find blockchain’s real-world utility.
