White House Council of Economic Advisers Released A new study suggests that banning stablecoin yields would do little to boost bank lending, even if it would remove the interest stablecoin holders can receive from competitive yields. The report, published on April 8, 2026, is at the heart of an ongoing political battle over whether stablecoins should be allowed to offer yield-like products directly or through related arrangements.
The study focuses on the GENIUS Act, which was signed into law in July 2025 and requires stablecoin issuers to hold reserves at least on a one-to-one basis in exchange for tokens. These reserves may be held in a narrow range of assets, including the U.S. dollar, Federal Reserve securities, certain insured or regulated bank deposits, short-term Treasury securities, Treasury-backed reverse repurchase agreements, and money market funds.
The law also prohibits stablecoin issuers from paying interest or yield directly to holders, although the White House notes that it does not explicitly prohibit affiliated structures or third parties that can still produce yield-bearing products. Some proposed versions of the Clarity Act would fill this gap.
The political argument behind the return ban is clear and straightforward. If stablecoins can offer returns that rival bank accounts, some households may move money from traditional deposits to tokens. Because stablecoin reserves are fully backed rather than partially lent out, critics say the influx could reduce the pool of deposits available to banks, and thus reduce lending.
The CEA study says it built a simple model to test those claims, including bolder estimates that suggest the impact of lending could be measured in trillions of dollars. The basic conclusion is much smaller than that. Under the CEA model, eliminating stablecoin yields would increase bank lending by just $2.1 billion, which the report says represents a 0.02% increase in lending.
Meanwhile, the model assigns the policy a net welfare cost of $800 million and a cost-benefit ratio of 6.6, meaning that consumer and economic losses outweigh gains in bank credit. In the report’s wording, a yield ban would do very little to protect bank lending while foregoing the consumer benefits of competitive returns on stablecoin holdings.
Case study of challenges to yield constraints
The report also says the additional lending will not be distributed evenly across the banking system. In the base scenario, large banks would account for 76% of the additional lending, while community banks, defined in the report as institutions with less than $10 billion in assets, would account for the remaining 24%. This results in about $500 million in additional lending to community banks, or a 0.026% increase for this sector.
Even when the CEA pushes the model into what it describes as worst-case territory, the lending effect remains much smaller than some previous alarmist claims. Under these stacked assumptions, the study says a yield ban would produce $531 billion in additional total lending, equivalent to a 4.4% increase in bank loans as of the fourth quarter of 2025.
But the report says the outcome depends on a series of highly unlikely circumstances: stablecoins would need to grow to roughly six times their current size as a share of deposits, all reserves would need to be non-loanable cash rather than Treasuries, and the Federal Reserve would need to abandon its current monetary framework.
The same pattern applies to community banks in the worst-case scenario. Even there, the report says community bank lending would rise by just $129 billion, or 6.7%. The White House study says the conditions required to find a positive welfare impact from a dividend ban are similarly implausible, reinforcing its broader conclusion that the case for a ban is weak.
The release arrives at a sensitive time for cryptocurrency politics as stablecoins have become one of the most controversial corners of the digital asset debate. Proponents argue that stablecoin yields could provide consumers with a useful alternative to low-interest bank deposits while keeping digital dollar holdings attractive and liquid.
By contrast, banks and some lawmakers worry that token-based returns could pull deposits away from the traditional banking system and make credit more expensive or difficult to access. The CEA report addresses this argument directly, but strongly argues that the impact on lending will be marginal.
This position could be important as lawmakers continue to debate how far stablecoin rules should go. Referring to that The law of genius Already prohibiting direct return to source while leaving room for affiliate or third-party solutions, the White House study also highlights a potential next battleground.
Rather, it is whether Congress should keep stablecoin returns capped, and tighten the rules further The law of clarity Language, or allowing market competition to determine how these products are regulated. For now, the FCA makes a clear case that the banking system would not gain much from a blanket ban, and that consumers would lose a legitimate source of return.
The White House published the study on April 8, 2026, and the document was framed not just as an academic exercise but as a political response to a lively legislative debate. In practical terms, this means that the administration is signaling that it views the yield issue as a consumer welfare issue, not just an issue of bank protection.
The report’s main message is that regulators and legislators should be careful about treating stablecoin returns as a significant enough threat to warrant strict restrictions, especially when typical lending gains are so small. The full conclusion from the White House’s analysis is simple: stablecoin yields appear to be far less risky for bank lending than critics have suggested.
At the same time, the ban will not come for free. It would reduce consumer choice and competitive returns, while achieving only a small increase in lending under the basic model approved by the Agency for Economic Cooperation and Development. Even under extreme assumptions, the report is still a long way from showing a significant benefit that would clearly justify this policy.
