White House economic advisors have pointed out that stablecoin yields will not have a major impact on bank lending and overall credit conditions. While regulations regarding stablecoins were on the agenda in the US Congress, this assessment came to the fore against concerns from the banking sector.
Findings of new report on stablecoin returns
In the report published by the Council of Economic Advisers, it was stated that restricting stablecoin returns will not make a meaningful contribution to banks. According to the report’s baseline scenario, the implementation of the yield stablecoin ban brings an increase in total loan volume of only $2.1 billion, or about 0.02 percent of total loans. On the other hand, it is emphasized that this restriction brings a net cost to consumers.
These results call into question the warnings of banks and some industry representatives that yield-bearing stablecoins could lead to deposit withdrawals and cause serious losses in the funds held by banks. The report reveals the view that, instead of mass deposit shifts as suggested by banks, the sectoral impact of yield stablecoin restrictions will be quite limited.
Criticisms from the banking sector and the legal process
Within the scope of the draft law called Clarity Act in the USA, periodic reward mechanisms for stablecoins with returns and returns given through intermediary institutions were also brought to the agenda. While these discussions create discomfort in the banking sector, some institutions claim that yield stablecoins may lead to mass deposit losses.
The Association of Independent Community Bankers has warned that yield-based stablecoins could trigger deposit losses of up to $1.3 trillion and a credit crunch of $850 billion. On the other hand, large bank executives and industry analysts suggest that this could reach much higher levels in more aggressive adaptation scenarios. Executives from major financial institutions such as Bank of America and JPMorgan reiterated the call for bank-specific regulations on yield stablecoins.
Banking industry officials point out that stablecoins, which act outside traditional regulations, can create an alternative system in the deposit race.
White House advisors, on the other hand, presented a more measured perspective on these views. They note that the majority of stablecoin reserves currently remain in the banking system and are mostly returned to the industry through treasury bills or other deposits.
According to the Council of Economic Advisers, approximately 12 percent of stablecoin reserves remain outside the system, unable to be converted into loans. It is stated that this structure significantly limits the impact of transitions from deposits to stablecoins on the sector.
“In summary, banning returns will not be an effective step to protect bank lending, but will prevent stablecoin savers from accessing more advantageous returns,” the report states.
In the legal process on the issue, it is stated that stablecoin regulation is progressing rapidly in Washington. Within the scope of the GENIUS Act, which came into force last year, it was stipulated that reserves should be kept at a one-to-one ratio and direct returns by issuers were prohibited. While the FDIC announced a new framework to supervise stablecoin issuers, industry representatives share the information that negotiations on the Clarity Act regulation are about to be completed.
