- A report from Trump’s Council of Economic Advisers found that stablecoin yields do not pose a significant risk to bank deposits and loans.
- Baseline data show that a prohibition on stablecoin rewards yields only a 0.02% increase in lending.
US President Donald Trump’s Council of Economic Advisers (CEAs) has recently evaluated the potential impact of the much-debated stablecoin yields in the deposit and lending services of traditional financial institutions. The body found that restricting the feature only carries a minimal impact on banks.
The official report titled “Effects of Stablecoin Yield Prohibition on Bank Lending” presents a fresh, model-based analysis to weigh how the variables interact with each other under different scenarios. It comes hot on the heels of the Bank of America’s (BOA) warning that stablecoin yields could catalyze massive deposit outflow from banks, which could rise by up to $6.6 trillion.
Stablecoin Yield Impact on Bank Deposits and Loans
CEA stated that the effect of stablecoin yield in the Clarity Act on deposits and contract lending is “quantitatively small.” At baseline calibration, the report highlighted that prohibiting rewards for simply holding the digital asset would increase lending by only 0.02%, to $2.1 billion.
Additionally, the move results in a net welfare cost of $800 million, meaning the losses to consumers stemming from the policy far outweigh the benefits. Meanwhile, it reflects a cost-benefit ratio (CBR) of 6.6, indicating that every dollar lost in economic welfare generates $6 in additional bank lending.
Even the worst-case scenario produced $531 billion in additional aggregate lending, resulting in a 4.4% increase in bank loans compared to Q4 2025. To have a meaningful impact on bank deposits and lending, stablecoin yields need to grow to roughly six times their current size under non-existent conditions, such as locking all reserves in unlendable cash rather than treasuries and the Federal Reserve ditching its existing monetary framework.
A Vindication of Coinbase
The report also serves as a powerful empirical vindication of Coinbase, which recently drew plenty of heat for insisting that stablecoin yields on holdings alone do not pose a significant risk to traditional bank deposits and loans. It opposed any effort by the banking industry to restrict them.
Furthermore, CEA’s model clearly demonstrates that the digital asset market and traditional banking can coexist without triggering the liquidity crisis that legacy institutions fear. The banking side’s generalization that users will dump savings for stablecoins is grossly overstated in the context of the White House paper.
