White House Economists Say Stablecoin Yield Ban Would Provide Minimal Bank Benefit

The White House Council of Economic Advisers released an analysis challenging banking industry lobbying efforts around the CLARITY Act, finding that banning stablecoin yield products would increase community bank lending by only 0.02% ($2.1 billion) while imposing significant consumer costs. The study counters banks' claims of $6.6 trillion in potential deposit outflows, determining that only 12% of stablecoin reserves are truly locked out of the credit multiplier. The stablecoin yield provision has been the major obstacle to the CLARITY Act's progress, with the Senate Banking Committee holding markup in hopes of a settlement between banking and crypto industries over whether third-party platforms like Coinbase can distribute rewards.

White House Economic Analysis on Stablecoin Yield Impact

• ▪Eliminating stablecoin yield would increase bank lending by $2.1 billion at baseline calibration, representing a net increase of 0.02% of total loans
• ▪Producing lending effects of $531 billion would require assuming the stablecoin market increases six times, all reserves shift into segregated deposits, and the Federal Reserve abandons its ample-reserves framework
• ▪White House economists found that only 12% of stablecoin reserves held in bank accounts is truly locked out of the credit multiplier

Banking Industry Concerns and Legislative Negotiations

• ▪Banks claimed that stablecoin yield could lead to $6.6 trillion in deposit outflows