The American Bankers Association challenged a White House report on stablecoin yield and said the paper missed the main risk for the banking system. The report argued that banning stablecoin yield would have only a small effect on bank lending. However, the banking group said the real issue is whether yield-bearing stablecoins could pull bank deposits away from smaller lenders.
The White House’s Council of Economic Advisers said in a research paper that banning stablecoin yield may increase bank lending by about $2.1 billion under a baseline scenario. That equals a net increase of about 0.02%. The paper therefore suggested that a ban on stablecoin yield would not materially change lending across the banking system.
Still, the American Bankers Association said that question does not address the live policy concern. In a statement, Sayee Srinivasan and Yikai Wang said policymakers should focus on whether allowing stablecoin yield would cause deposit outflows, especially from community banks. They said the White House studied the “wrong question.”
Stablecoin Yield Debate Puts Community Banks at the Center
The banking group said even if total bank deposits across the system remain stable, money could still move away from community banks. In that case, smaller institutions would lose lower-cost funding. As a result, they may need to rely on more expensive sources of money.
That matters because community banks often support local borrowers and small businesses. If their funding costs rise, local lending could weaken. The ABA said some smaller banks may not have enough balance sheet flexibility to manage those outflows without turning to higher-cost wholesale borrowing.
Therefore, the dispute is not only about total bank lending. It is also about where deposits go inside the system. The bankers argued that a shift from smaller banks to larger institutions would still damage the parts of the market that depend on local lenders.
White House Report Says Stablecoin Yield Ban Has Limited Lending Effect
The White House report took a narrower view. It focused on the impact that a ban on stablecoin yield would have on total lending. Under that approach, the result looked limited. The paper said the effect on lending would remain small even if policymakers block yield payments on payment stablecoins.
The report also suggested that stablecoin-related funds do not simply disappear from the financial system. In many cases, stablecoin reserves are held in assets such as Treasurys. Because of that, the White House paper indicated that the broader financial system may still retain liquidity even when users move funds into stablecoins.
However, the American Bankers Association said that approach does not capture the pressure on community banks. It argued that smaller lenders face a different reality than large institutions. Even modest deposit outflows can hit them harder because they have fewer options to replace lost funding at low cost.
Deposit Outflows Add to Stablecoin Regulation Fight
The ABA also acknowledged a basic point in the stablecoin yield debate. Households and businesses may have a clear financial reason to move funds if stablecoins offer higher returns than bank accounts. That incentive sits at the center of the policy fight over stablecoin regulation.
The concern also matches an earlier Treasury-related estimate from April 2025. That paper said broad stablecoin adoption could lead to $6.6 trillion in deposit outflows from the U.S. banking system. The ABA used that wider risk to support its warning about funding pressure on smaller banks.
At the same time, crypto industry figures have argued that stablecoin yield would push banks to compete more directly for deposits. Coinbase CEO Brian Armstrong has criticized banks for offering near-zero interest on deposits for years. On the other side, the American Bankers Association, whose members include JPMorgan Chase, Goldman Sachs, and Citigroup, says stablecoin regulation must consider how stablecoin yield could reshape bank deposits, funding costs, and local bank lending.
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Tatevik Avetisyan is an editor at Kriptoworld who covers emerging crypto trends, blockchain innovation, and altcoin developments. She is passionate about breaking down complex stories for a global audience and making digital finance more accessible.
📅 Published: April 14, 2026 • 🕓 Last updated: April 14, 2026
