Crypto13 April, 20261 min read
American Bankers Association Rebukes White House Over Stablecoin Yield Risks
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American Bankers Association says White House analysis studied the wrong question on yield-bearing stablecoins. Yield-bearing stablecoins threaten bank deposits and reduce lending through potential outflows.
ABA Rebukes White House
The ABA issued a formal rebuttal to the White House CEA report, arguing the White House analyzed the wrong scenario. The CEA report found banning yield would increase bank lending by only $2.1 billion, or roughly 0.02% of outstanding loans. The ABA warned that yield-paying stablecoins could accelerate deposit migration out of insured accounts, especially at community banks.
The dispute over stablecoin yield remains the chief sticking point in the Clarity Act. Senator Lummis declared it is now or never for the bill.
Divergent Impact Assessments
The ABA's analysis suggested credit effects could be significant, including a $4.4 billion to $8.7 billion reduction in lending within a single state. The White House paper stressed that issuers reinvest reserves into Treasury bills, repos, and money-market funds. Aggregate deposits stay largely flat, with banks holding over $1.1 trillion in excess liquidity.
The ABA counters that this misses what happens at individual institutions when deposits walk out the door. Higher funding costs translate into less local credit and higher loan rates for households and small businesses.
Crypto Industry Pushback
Crypto industry executives warned that banning yield would undermine the dollar's competitiveness. Coinbase CEO Brian Armstrong said yields won't change lending but will impact competitiveness.
Bank of America CEO Brian Moynihan said stablecoins could lead to $6 trillion of deposit outflows. The prohibition on yield-bearing stablecoins is seen by crypto executives as a move to shield banks.