Home
Cryptocurrency
Cryptocurrency News
White House Report Challenged by American Bankers Association on Stablecoin Yields

White House Report Challenged by American Bankers Association on Stablecoin Yields

Debate intensifies over the impact of stablecoin yields on the banking system.

Written by Rahul Dhingra, Edited by David Delima | Updated: 14 April 2026 17:56 IST

White House Report Challenged by American Bankers Association on Stablecoin Yields

Photo Credit: Unsplash/Shubham Dhage

Banking group raises concerns over risks tied to yield-bearing stablecoins

Click Here to Add Gadgets360 As A Trusted Source

Highlights

ABA warns of deposit outflows from smaller banks
White House report sees minimal impact on lending
The stablecoin market could reach a massive scale

The American Bankers Association (ABA) has widely criticised a White House report that claimed banning stablecoin yields would only have a negative impact on banks. The association argued that the US President's Council of Economic Advisers (CEA) reached this outcome by asking the ‘wrong policy question'. They highlighted that the real risk lies not in banning yield, but in allowing it to scale. ABA believes that policymakers should assess what happens if the yield is allowed, particularly as the stablecoin market can potentially reach a market size of $1–$2 trillion (roughly Rs. 93,08,000–1,86,16,000 crore).

Banking Body Challenges Assumptions in Stablecoin Policy Debate

This became a concern for bankers as last week, White House's Council of Economic Advisers claimed in a research paper on “Effects of Stablecoin Yield Prohibition on Bank Lending,” that under a particular scenario, banning stablecoin yield would only increase bank lending by roughly 0.02 percent. The ABA has further argued that this move could give users an incentive to move funds out of bank deposits, especially from smaller institutions.

ABA chief economist Sayee Srinivasan and vice president for banking and economic research Yikai Wang have said that the core policy's concern is not whether banning yield on stablecoin would impact bank lending, but whether it will encourage deposit outflows, especially from community banks.

Former US CFTC Chair Set to Advise Cryptocurrency Firms

Explaining this concern with a broader angle, ABA, in their banking journal, said, “We recognise the CEA may have chosen its framing for analytical reasons. But as a practical matter, this framing tracks the crypto industry's preferred narrative: treat a yield prohibition as the 'intervention,' then conclude that the modelled effects (of no prohibition) are small. Policymakers should not mistake that narrow result for evidence that yield-paying payment stablecoins are benign.”

New analysis from the ABA econ team - the CEA studied the wrong question on stablecoin ‘yield' and community banks. The real question is whether allowing yield would encourage deposit flight and harm economic growth.

Read it here: https://t.co/z7IShwNaHH pic.twitter.com/OIjQvjtGij
— American Bankers Association (@ABABankers) April 13, 2026

Last week, a study by Chainalysis said that stablecoin transactions are estimated to cross $1.5 quadrillion (roughly Rs. 1,39,50,00,000 crore) within the next decade, potentially exceeding current estimates of global cross-border payments volumes. This tells us that banning stablecoin yields will definitely have a broader impact on the banking sector, hence the reason why ABA wants the policymakers to look into this matter with greater attention.

Overall, the CEA paper does not justify the core risks in treating such stablecoin yields. This indicates that there is ample evidence that a ban on stablecoin yield is a well-judged decision. Policymakers must weigh in the potential benefits, risks and raise questions around deposit stability, financial inclusion, and market competition. As the stablecoin market is expected to expand significantly in the coming years, regulatory decisions on yield mechanisms could play a crucial role in shaping how stablecoins interact with the broader banking ecosystem.

Cryptocurrency is an unregulated digital currency, not a legal tender and subject to market risks. The information provided in the article is not intended to be and does not constitute financial advice, trading advice or any other advice or recommendation of any sort offered or endorsed by NDTV. NDTV shall not be responsible for any loss arising from any investment based on any perceived recommendation, forecast or any other information contained in the article.

Comments

Get your daily dose of tech news, reviews, and insights, in under 80 characters on Gadgets 360 Turbo. Connect with fellow tech lovers on our Forum. Follow us on X, Facebook, WhatsApp, Threads and Google News for instant updates. Catch all the action on our YouTube channel.

Further reading: Cryptocurrency, Stablecoin, Crypto Banking

Rahul Dhingra

Email Rahul Dhingra

Rahul Dhingra is a crypto writer at Gadgets 360, where he covers the exciting world of Cryptocurrency, Blockchain, Defi and Web3. Before joining Gadgets 360, he worked as a content specialist for a European-based Crypto Exchange. Rahul loves storytelling, not just through the written word but also through the visual medium. Beyond his professional life, Rahul is a sports fanatic. Whether it’s cricket or football, his passion for the game is contagious. More