The American Banking Association (ABA) has criticized a White House report that downplayed risks from yield-bearing stablecoins. The 8 Apr study by the Council of Economic Advisers (CEA), released under the Trump administration, aligns with the president's push to make the US the "crypto capital of the world," including his signing of the GENIUS Act in July 2025.
Banks Rebut White House Stablecoin Yield Claims, Warn of Community Bank Damage
14 April 2026 - 09:05 CEST
The CEA concluded that banning stablecoin yields would boost US bank lending by only $2.1bn – just 0.02% of the overall market – while imposing an $800mn net welfare loss on consumers by denying competitive returns.
The ABA, the leading trade group for US banks, responded in a 13 Apr analysis in the ABA Banking Journal. Chief Economist Sayee Srinivasan and Vice President Yikai Wang argued the report focused on a prohibition's effects rather than the impact of yields as the market scales from roughly $300bn today toward $1tn–$2tn.
"Even if that estimate is directionally correct, it tells policymakers little about the question they really need answered: What is the lending and funding-cost impact of allowing yield as stablecoins grow from today’s scale to a much larger market?" the ABA stated.
How stablecoin yields work
Stablecoins are dollar-pegged digital tokens for fast, low-cost blockchain payments. Leading examples include Tether's USDT, Circle's USDC and newer entrants such as World Liberty Financial's USD1.
Yields rarely come directly from issuers. Instead, holders earn returns via centralized exchange reward programs, such as Coinbase's USDC Rewards, or by depositing into decentralized finance (DeFi) protocols like Aave for lending or liquidity pools on Curve and Uniswap. These mechanisms have offered yields recently ranging from 3% to 8% or higher.
Retail users seek better returns than bank savings accounts with easy transferability. Institutions use them for efficient cash management and treasury operations.
Risks intensify at scale
The ABA warned that permitting yields could trigger deposit flight from regulated banks, especially community and regional institutions holding under $10bn in assets. These banks rely on deposits for local loans to small businesses, homes and agriculture.
The Independent Community Bankers of America (ICBA) estimated yield-bearing stablecoins could siphon up to $1.3tn in deposits, potentially cutting community bank lending by $850bn and starving local economies of credit. The ABA projected lending reductions of $4.4bn–$8.7bn in a single state such as Iowa.
Policy context
The debate occurs as the FDIC proposes stricter rules implementing the GENIUS Act, including bans on indirect yields through affiliates or third parties, faster redemptions, and tighter reserve requirements. Discussions about the CLARITY Act continue to address potential loopholes.
Stablecoin advocates highlight consumer benefits and payment innovation. Banking groups argue such competition threatens financial stability and local credit.
