The White House has published economic research indicating that banning yield-bearing stablecoins would have a negligible positive impact on the traditional banking sector. According to a report highlighted by Bloomberg, eliminating stablecoin rewards would increase total bank lending by a mere $2.1 billion, or just 0.02%.
The analysis challenges the narrative that stablecoin incentives pose a significant threat to bank deposits and lending capacity. The research paper details that even this marginal increase in lending would be disproportionately distributed, with large banks accounting for 76% of the additional lending and community banks generating the remaining 24%. For community banks specifically, the increase amounts to roughly $500 million, or a 0.026% boost.
Furthermore, the White House economists argue that such a prohibition would carry a net welfare cost of $800 million, as it would forgo consumer benefits from competitive returns offered by stablecoins. The paper concludes that the trade-off is weak, offering only limited protection for bank credit creation while removing a beneficial financial product for consumers.
This research signals a more balanced and measured regulatory stance from U.S. policymakers. It suggests that concerns over stablecoin rewards destabilizing the banking system may be overstated, potentially reducing the likelihood of aggressive, broad-based regulatory crackdowns on yield-bearing stablecoins. The findings allow room for continued innovation and growth in the digital asset space, provided consumer protection and financial stability remain priorities.
