White House Study Dropped: Stablecoin Yields Are Basically a 'Whatever' for Banks

The White House Council of Economic Advisers (CEA) dropped a report that should make stablecoin degens feel vindicated. According to the study requested by the US Senate Banking Committee, stablecoins and their yields pose basically zero threat to bank deposits.

The numbers tell the story. Eliminating interest on stablecoins would bump up banks' lending capacity by a mere 0.02% (~$2.1 billion). Meanwhile, consumers would get slapped with $800 million in welfare costs. Not exactly a great trade-off, right?

The CEA even ran a worst-case scenario where stablecoin market cap exploded to six times its current size, reserves became non-lendable, and the Fed completely abandoned its current policies. In that "implausible" situation? Bank lending would grow by just 6.7% ($129 billion).

The economists found zero scenarios where banning stablecoin yields actually improved welfare. They also dismissed "capital flight" fears as "quantitatively small," noting that most stablecoin reserves already sit inside the traditional banking system.

"A yield prohibition would do very little to protect bank lending, while forgoing the consumer benefits of competitive returns," the report noted.

Coinbase's policy team is all in on the findings. Chief Policy Officer Faryar Shirzad pointed out that multiple analyses now conclude: "Stablecoins are an opportunity and not a threat." CEO Brian Armstrong shared the report with a simple highlight: "White House Economists Say Stablecoin Rewards Won't Harm Banks."

Banks, however, aren't convinced. One insider noted that even when stablecoin reserves flow back to banks, they "don't always come back in the same form." The concern is that stablecoin yields could trigger massive outflows, forcing institutions to restructure their entire lending operations.

The crypto community is largely celebrating the report as a stamp of legitimacy for stablecoin adoption globally. The study is now a key reference point for the CLARITY Act, expected to receive a markup in April before heading to a Senate vote in May.