The American Bankers Association (ABA) pushed back against a White House Council of Economic Advisers (CEA) paper that concluded banning yield on stablecoins would have only a negligible effect on bank lending. The CEA’s research, “Effects of Stablecoin Yield Prohibition on Bank Lending,” estimated that, under a baseline scenario, prohibiting stablecoin yield might boost bank lending by just $2.1 billion — about a 0.02% net increase.
ABA chief economist Sayee Srinivasan and vice president for banking and economic research Yikai Wang said the CEA asked the “wrong question.” Their concern is not primarily whether a ban would change aggregate bank lending, they wrote, but whether permitting stablecoin yields would trigger deposit outflows from smaller, community banks to larger institutions. Even if total deposits in the banking system stayed the same, funds shifting toward large banks could raise funding costs for community banks and reduce local lending.
Srinivasan and Wang warned some smaller banks may lack the balance-sheet flexibility to absorb such outflows and could be forced into higher-cost wholesale borrowing. The ABA’s warning echoes a 2025 Treasury analysis that suggested widespread stablecoin use could cause as much as $6.6 trillion in deposit outflows from U.S. banks.
Lawmakers and industry participants are negotiating language in a Senate bill that would clarify crypto regulation, with stablecoin yield prohibition a key dispute. Proponents of allowing yield, including some crypto executives, argue higher returns on stablecoins would push banks to pay more competitive rates on deposits; critics in banking say that dynamic would disproportionately harm community institutions.
The ABA’s membership includes large national banks such as JPMorgan Chase, Goldman Sachs and Citigroup. The association’s economists acknowledge stablecoin rewards would be appealing to households and businesses and could financially incentivize moving funds out of traditional banks — the very outcome they warn could concentrate deposits and weaken local lenders.