White House Report Finds Stablecoin Rewards Present Minimal Risk to Bank Lending

This report reshapes the conversation around stablecoin regulations and their perceived threat to traditional banking, influencing future policy decisions.

• On April 8, 2026, the White House Council of Economic Advisers released a report stating that stablecoin rewards pose minimal risk to bank lending.
• The analysis found that prohibiting yields on stablecoins would only increase lending by 0.02%, while imposing $800 million in consumer welfare costs.
• The report supports the crypto industry's argument that stablecoin reserves remain within the financial system, countering banks' fears of massive deposit outflows.

• The GENIUS Act, enacted in July 2025, mandates stablecoins to be backed by one-to-one reserves, prohibiting yield payments to prevent deposit shifts from banks.
• Banks claimed that allowing yields would trigger up to $6 trillion in deposit outflows, potentially crippling their lending capabilities.
• Crypto advocates argued that reserves would stay within the financial system, preserving overall deposits and mitigating risks to lending.

The Council of Economic Advisers' report, titled "Effects of Stablecoin Yield Prohibition on Bank Lending," employs a stylized economic model to assess the impact of stablecoin yield bans on bank lending. The findings indicate that under baseline conditions, eliminating yields would only marginally boost lending by $2.1 billion, which is a mere 0.02% of total U.S. bank lending. This increase is projected to benefit large banks significantly more than community banks, with large banks capturing approximately 76% of the gains.

The analysis also explores an extreme scenario where the stablecoin market grows sixfold, and reserves are held in unlendable cash. In this case, the potential increase in lending could reach 4.4%. However, the report ultimately concludes that the prohibition of yields is ineffective in protecting bank lending, suggesting that the fears expressed by the banking sector may be overstated.

This report is crucial as it informs the ongoing implementation of the GENIUS Act, which aims to regulate stablecoins while addressing concerns from the banking industry. The findings could strengthen the position of crypto advocates who argue for the allowance of yields, potentially leading to a reevaluation of the current restrictions.

Moreover, the report has garnered positive reactions from crypto leaders, including executives from Coinbase, who praised its findings for debunking the fears of deposit flight. The banking industry's response has been muted, indicating a potential shift in the narrative surrounding stablecoins and their role in the financial ecosystem.

As the U.S. grapples with these regulatory challenges, the contrasting approach taken by Dubai, which allows yield-bearing stablecoins, highlights the potential for the UAE to emerge as a leading crypto hub. With no personal income tax on gains and a permissive regulatory framework, Dubai is positioned to attract stablecoin users, further complicating the landscape for U.S. banks.

• Crypto investors: They may benefit from clearer regulations and potential yield opportunities.
• Banking sector: Traditional banks could face pressure to adapt to a changing financial landscape.
• Consumers: Individuals using stablecoins for transactions may experience improved options and services.

• Regulatory developments: Keep an eye on any changes to the GENIUS Act and how they might affect stablecoin yields.
• Market reactions: Observe how banks and crypto firms adjust their strategies in response to this report.
• Consumer behavior: Watch for shifts in how consumers engage with stablecoins versus traditional banking options.