The White House Council of Economic Advisers released a formal analysis on Tuesday, concluding that allowing stablecoin issuers to pay investors a yield on their holdings would only marginally replace bank loans, directly contradicting banking industry warnings that have stalled the Clarity Act in the Senate Banking Committee since January 2026.
The report, published on April 9, 2026, quantifies the banking sector’s claimed exposure as dramatically overstated, predicting that allowing stablecoin yields would only increase bank lending by $2.1 billion, or about 0.02% of outstanding loans, rather than triggering the systematic deposit flight that bank lobbyists have argued in Congress.
🚨Huge: Stablecoin rewards don’t hurt banks
Despite the massive controversy over the impact of the CLARITY Act and stablecoins on US bank deposits, the current prevailing tone suggests an entirely positive outcome.
Here’s Bloomberg’s new headline…
White House economists say this… pic.twitter.com/0BSKDHvytt
— BSCN (@BSCNews) April 10, 2026
We suspect that the release of this report is not primarily an academic effort, but a deliberate intervention by the executive branch aimed at providing legislative cover for a bipartisan yield compromise, accelerating the CLARITY Act’s departure from committee by neutralizing the empirical basis of banking industry opposition.
The issue of stablecoin yields has become a central issue in federal digital asset regulation, with economic officials from banking industry groups, virtual currency exchanges, and government agencies now openly disagreeing over the amount of competitive risk that yielding stablecoins pose to the deposit base of federally insured institutions.
Yield Prohibition, Reserve Structure, and GENIUS Law Baseline
Congress has spent much of the past six months passing a framework that brings the future of finance home.
It’s time for @BankingGOP to do the markup and send the CLARITY Act to President Trump’s desk.
The Senate’s time is precious, and now is the time to act.
— Treasury Secretary Scott Bessent (@SecScottBessent) April 9, 2026
The Guidance and Establishment of National Innovation for U.S. Stablecoins Act (GENIUS Act), enacted in July 2025, requires stablecoin issuers to hold assets such as U.S. dollars and U.S. Treasuries on a 1:1 basis. Issuers are also prohibited from transferring the yield generated by these reserves to token holders in order to prevent deposits from being transferred from federally insured banks.
However, the language of the law leaves open the possibility for exchanges to offer rewards associated with stablecoin balances, which Coinbase took advantage of with its USDC rewards product.
As the CLARITY Act sought to extend the yield ban to exchanges, Coinbase withdrew its support for the bill, slowing its progress. The Independent Community Bankers of America (ICBA) urged Congress to support the ban, arguing that allowing the yield would cost small banks $1.3 trillion in deposits.
However, the CEA report disputes ICBA’s numbers and predicts that the yield ban will increase bank lending by $2.1 billion. Even in the extreme scenario, the council estimates that lending would only increase by $531 billion, with large banks primarily benefiting, accounting for 76% of the increase. Meanwhile, regional banks would stand to gain about $129 billion, undermining ICBA’s argument that the yield ban protects banks.
CLARITY Act Impact on Issuers and Exchanges: Circle, Coinbase, and Competitive Yield Premiums
CEA’s findings impact the competitive position of Circle Internet Financial, Coinbase Global, and Paxos Trust Company, particularly with respect to yield issues. Circle’s USDC is primarily backed by short-term government bonds and cash equivalents, and currently only Circle is allowed to generate yield.
Legislating yield passthrough could allow Circle and its competitors to offer returns comparable to money market funds, potentially changing USDC’s value proposition and accelerating the shift in stablecoin market share evident in early 2026 data.
Paul Grewal, Coinbase’s chief legal officer, deemed the CEA report conclusive as it found no evidence that stablecoin rewards lead to deposit flight and suggested critics were trying to hide these findings. Interpreting this report as a pivotal political moment reflects the crypto industry’s view of the CLARITY Act, which many now believe is “virtually inevitable.”
The banking industry’s concerns reflect regulatory actions regarding money market mutual funds after the 2008 financial crisis, highlighting the competitive imbalance created by high-yielding products outside the framework of deposit insurance. Although the CEA report acknowledges these concerns, it takes issue with the scope of deposit transfers, a key element of Congress’s potential compromise language. Additionally, federal oversight of stablecoins interacts with emerging state regulations, complicating enforcement if Congress leaves yield policy ambiguous.
Regulators have provided notice and are seeking comment. Regulatory authority under the Administrative Procedures Act. Regulators…actually regulate. I was able to get used to this. https://t.co/SHn8lRISJJ
— Paul Grewal (@iampaulgrewal) April 8, 2026
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Congressional dynamics: Tillis, Alsobrooks, and the posture of the Senate Banking Committee.
The fate of the CLARITY Act rests largely with Sens. Thom Tillis (R.N.C.) and Angela Alsobrooks (D-Md.), who reached a preliminary agreement with White House officials in March 2026 to address the bill’s yield issues.
The agreement, which has not yet been formalized and requires input from the banking and crypto industries before passing through the Senate Banking Committee, has faced delays since January. White House cryptocurrency adviser Patrick Witt noted that more work is needed on the bill’s language and that the timeline remains open-ended.
The situation for the Senate Banking Committee is further complicated by the GENIUS Act’s ban, which protects committee members affiliated with banks. If the CLARITY Act were amended to allow yield, committee members would be forced to vote to expand stablecoin functionality beyond the limits set by the GENIUS Act.
The Blockchain Association described recent White House discussions as a step toward bipartisan agreement, but getting actual agreement in committee remains a challenge.
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Disclaimer: Coinspeaker is committed to providing fair and transparent reporting. This article is intended to provide accurate and timely information but should not be taken as financial or investment advice. Market conditions can change rapidly, so we recommend that you verify the information yourself and consult a professional before making any decisions based on this content.
Daniel Frances is a technical writer and Web3 educator specializing in macroeconomics and DeFi mechanisms. A crypto native since 2017, Daniel leverages his background in on-chain analytics to write evidence-based reports and detailed guides. He holds certifications from The Blockchain Council and is dedicated to providing “information acquisition” that breaks through the market hype and finds real-world blockchain utility.
