White House: banning yields would cost consumers
A White House economic analysis said banning yield on stablecoins would impose material costs on consumers because yield‑bearing stablecoins can pass interest through rather than leaving it with intermediaries. The report frames the current policy debate as one over who captures stablecoin economics rather than a simple ban on yield products. (techstory.in)
The White House said on April 8 that banning yield on dollar-backed stablecoins would cost consumers more than it would help bank lending. (whitehouse.gov) The Council of Economic Advisers estimated that eliminating stablecoin yield would raise bank lending by $2.1 billion, or 0.02%, while imposing an $800 million net welfare cost on consumers. The report put the cost-benefit ratio at 6.6. (whitehouse.gov) A stablecoin is a digital token designed to stay at $1 and redeemable on demand for one U.S. dollar. The White House said issuers create tokens when users deposit dollars and destroy them when users cash out, while reserves sit in cash, short-term Treasuries, reverse repurchase agreements, or money market funds. (whitehouse.gov) The fight is over who keeps the interest generated by those reserves. The White House said yield-bearing stablecoin products can pass some of that return to users instead of leaving it with issuers, exchanges, or other intermediaries. (whitehouse.gov) The current federal baseline comes from the Guiding and Establishing National Innovation for U.S. Stablecoins Act, or GENIUS Act, which President Donald Trump signed on July 18, 2025. The law requires one-to-one reserves and bars issuers from paying interest or yield directly to holders. (whitehouse.gov) The White House report said the law does not explicitly ban affiliate or third-party structures that wrap stablecoins into interest-bearing products. It said some versions of the proposed Digital Asset Market Clarity Act, or CLARITY Act, would close that channel. (whitehouse.gov; whitehouse.gov) The banking argument is that higher-yielding stablecoin products could pull deposits out of banks, and banks lend those deposits out under a fractional-reserve model. The White House said that concern is overstated because the modeled gain to community banks was about $500 million, a 0.026% increase in their lending. (whitehouse.gov) Even the report’s harshest scenario did not produce a clean case for a ban. The White House said the model reached $531 billion in extra lending only if stablecoins grew to roughly six times their current share of deposits, reserves stayed in unlendable cash instead of Treasuries, and the Federal Reserve abandoned its current monetary framework. (whitehouse.gov) That analysis lands in a broader policy push that has favored regulated stablecoins as payment rails and Treasury buyers. In 2025, the administration backed the GENIUS Act as a way to modernize payments, expand demand for U.S. debt, and strengthen the dollar’s role in digital finance. (whitehouse.gov; whitehouse.gov) The immediate question in Washington is no longer whether stablecoins can exist under federal law. It is whether the yield from a token backed by dollars and Treasuries stays with financial intermediaries or reaches the people holding the token. (whitehouse.gov)
