Effects of Stablecoin Yield Prohibition on Bank Lending
Council of Economic Advisers
This Council of Economic Advisers report analyzes the economic impact of prohibiting stablecoin issuers from offering yields or interest to consumers.
Specifically, it evaluates whether the yield ban established by the 2025 GENIUS Act and the proposed CLARITY Act is necessary to protect traditional bank lending.
The analysis concludes that banning stablecoin yields does very little to protect bank loans while actively harming consumers by denying them competitive returns.
This report challenges the traditional banking sector's claim that paying interest on stablecoins will cause a massive flight of consumer deposits and freeze bank lending.
The White House model found that eliminating stablecoin yield only increases overall bank lending by a negligible $2.1 billion, or 0.02%.
Furthermore, this prohibition carries a net welfare cost of $800 million to the public.
Ultimately, the data shows that blocking everyday consumers from earning interest on their digital stablecoin holdings provides almost no meaningful protection for community bank loans.
Even under extreme, worst-case scenarios, the federal government found that restricting consumer returns is a highly inefficient way to prop up traditional financial institutions.
