White House says banning stablecoin yields barely helps banks but hurts consumers, reshaping the CLARITY Act fight over interest‑bearing “digital cash.”
Summary
- White House economists say banning stablecoin yields would barely boost bank lending.
- The finding strengthens political momentum for the CLARITY Act in the U.S. Senate.
- Treasury and SEC leaders back the bill, but the Senate Banking Committee has yet to set a markup date.
A new White House study has concluded that prohibiting yield on stablecoins would do little to protect U.S. bank lending, directly challenging the core argument advanced by the banking lobby as the Digital Asset Market CLARITY Act heads into a decisive phase in the Senate. The analysis arrives just as lawmakers haggle over whether the landmark bill should ban interest‑bearing “digital cash” ahead of a possible Senate Banking Committee markup later this spring.
According to the White House Council of Economic Advisers, eliminating yield on stablecoins would increase total U.S. bank lending by just $2.1 billion, equivalent to about 0.02% of outstanding loans, while imposing a net welfare cost of roughly $800 million on households who lose access to returns on their tokenized dollars. “In short, a yield prohibition would do very little to protect bank lending, while forgoing the consumer benefits of competitive returns on stablecoin holdings,” the report states, undercutting claims that interest‑bearing stablecoins pose a material threat to community banks. Large banks would account for about 76% of the additional lending, with community banks below $10 billion in assets contributing the remaining 24%, or roughly $500 million.
The American Bankers Association has pushed back, accusing the White House of asking the “wrong question” and warning that allowing yield‑bearing stablecoins at scale would inevitably squeeze net interest margins and restrict credit to small businesses. But crypto‑industry advocates have seized on the CEA numbers as evidence that a blanket ban is economically unjustified, pointing to a global stablecoin market now estimated at more than $280 billion and dominated by tokens such as tether and USD coin.
CLARITY Act authors are still negotiating the yield language after a March draft circulated in the Senate would have “banned passive yield on stablecoin balances directly or indirectly and permitted only narrowly defined activity‑based rewards,” a structure industry groups argued was tailored to satisfy bank demands. Coinbase chief legal officer Paul Grewal recently told Fox Business that negotiators are “very close to a deal” on the issue, while a White House crypto adviser said the emerging compromise on yield “seems to be intact” as the bill moves toward markup. Treasury Secretary Scott Bessent and SEC Chair Paul Atkins have both publicly endorsed the CLARITY Act, signaling unusual alignment between the administration and market regulators as they press the Senate to act before the 2026 election calendar makes major legislation harder to pass.
If enacted, the CLARITY Act would become the first comprehensive U.S. market‑structure law for digital assets, codifying the split between SEC and CFTC jurisdiction, tightening guardrails around stablecoin reserves and yields, and potentially reshaping how trillions of dollars in tokenized assets clear and settle on‑chain.
