The American Bankers Association (ABA) criticized a White House Council of Economic Advisers (CEA) paper that found banning yield on stablecoins would have a negligible effect on bank lending. The CEA study, titled Effects of Stablecoin Yield Prohibition on Bank Lending, estimated that a prohibition might increase bank lending by about $2.1 billion under a baseline scenario — roughly a 0.02% net rise.
ABA chief economist Sayee Srinivasan and vice president for banking and economic research Yikai Wang wrote that the CEA asked the “wrong question.” Their concern is not the aggregate level of lending but the potential for stablecoin yields to prompt deposit shifts from smaller, community banks to larger institutions. Even if total deposits in the system remained unchanged, the ABA argued, a reallocation toward big banks could raise funding costs for community banks and reduce local lending.
Srinivasan and Wang warned that some smaller banks lack the balance-sheet flexibility to absorb such outflows and might be forced into higher-cost wholesale borrowing. The ABA’s caution echoes a 2025 Treasury analysis that suggested broad stablecoin adoption could trigger as much as $6.6 trillion in deposit outflows from U.S. banks.
Lawmakers and industry stakeholders are negotiating language in a Senate bill aimed at clarifying crypto regulation, with the question of whether to prohibit stablecoin yields a central dispute. Supporters of allowing yield — including some crypto executives — say higher returns on stablecoins would push banks to offer more competitive deposit rates. Banking critics counter that the effect would disproportionately harm community institutions.
The ABA, whose members include large national banks such as JPMorgan Chase, Goldman Sachs and Citigroup, acknowledged that stablecoin rewards would appeal to households and businesses and could financially incentivize moving funds out of traditional banks — a shift the association says risks concentrating deposits and weakening local lenders.