The White House Council of Economic Advisers released a formal analysis on Tuesday, concluding that allowing stablecoin issuers to pay investors a return on their holdings would produce only a marginal shift in bank lending, directly contradicting warnings from the banking industry that have stalled the CLARITY Act in the Senate Banking Committee since January 2026.
The report, released April 9, 2026, calls the banking sector’s claimed exposure significantly overstated, projecting that allowing a stable currency yield would increase bank lending by only $2.1 billion, or about 0.02% of total outstanding loans, rather than triggering the systemic deposit flight as bank lobbyists have argued before Congress.
🚨HUGE: STABLECOIN REWARDS DO NOT HARM BANKS
Despite massive controversy surrounding the CLARITY Act and the impact stablecoins could have on U.S. bank deposits, the dominant narrative now suggests an entirely positive outcome.
A new headline from Bloomberg says…
“White House economists say… pic.twitter.com/0BSKDHvytt
– BSCN (@BSCNews) April 10, 2026
We suspect that the release of the report is not primarily an academic exercise but a deliberate executive intervention intended to provide legislative cover for a bipartisan compromise on returns, thereby hastening the CLARITY Act’s passage out of committee by neutralizing the empirical basis for the banking industry’s opposition.
The issue of stablecoin yield has become the central fault line in federal regulation of digital assets, with banking trade groups, crypto exchanges and executive economic officials in open disagreement over the extent of the competitive risk that yield-producing stablecoins pose to the depository base of federally insured institutions.
Yield ban, reserve architecture and GENIUS law reference
Congress has spent the better part of a half-decade trying to pass a framework to shore up the future of finance.
It’s time for @BankingGOP to 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 Directing and Establishing Domestic Innovation for Stablecoins in the United States Act (GENIUS Act), signed into law in July 2025, requires stablecoin issuers to maintain an individual reserve of assets, such as U.S. dollars and Treasury bills. It also prohibits issuers from passing on the yield generated by these reserves to token holders, in an effort to prevent the migration of deposits from federally insured banks.
However, the language of the law leaves open the possibility that exchanges could offer rewards tied to stablecoin balances, which Coinbase has capitalized on with its USDC rewards product.
The CLARITY Act sought to extend the yield ban to exchanges, leading Coinbase to withdraw its support for the legislation and block its progress. The Independent Community Bankers of America (ICBA) urged Congress to uphold the ban, arguing that allowing the yield would result in a $1.3 trillion loss of deposits for small banks.
However, a CEA report disputes the ICBA figures, predicting a $2.1 billion increase in bank lending following a yield ban. Even in extreme scenarios, the council estimates an increase in lending of just $531 billion, primarily benefiting large banks, which would capture 76% of that increase. Meanwhile, community banks would earn about $129 billion, contradicting ICBA’s claims that the yield ban would protect them.
Issuer and Exchange Implications of the CLARITY Act: Circle, Coinbase, and the Competitive Yield Bonus
The CEA’s findings impact the competitive positioning of Circle Internet Financial, Coinbase Global and Paxos Trust Company, particularly with respect to the issue of yield. Circle’s USDC, backed primarily by short-term Treasury bills and cash equivalents, currently allows returns to accrue only to Circle.
Legislative authorization for yield pass-through could allow Circle and its competitors to offer yields that rival money market funds, potentially changing USDC’s value proposition and accelerating changes in stablecoin market share evident in early 2026 data.
Coinbase General Counsel Paul Grewal called the CEA report decisive because he found no evidence that stablecoin rewards led to deposit flight and suggested that critics had tried to suppress those findings. This interpretation of the report as a crucial political moment reflects the crypto industry’s view of the CLARITY Act, which many see as now “virtually inevitable.”
The banking sector’s concerns echo regulatory actions taken following the 2008 financial crisis regarding money market mutual funds, highlighting the competitive imbalances created by yield-generating instruments outside the framework of deposit insurance. Although the CEA report acknowledges these concerns, it disputes the extent of deposit migration, a key factor for potential compromise language from Congress. Additionally, federal oversight of stablecoins interacts with emerging state regulations, complicating enforcement if Congress leaves yield policies ambiguous.
A regulatory body providing advice and soliciting feedback. A regulator following the administrative procedure law. A regulator… which really regulates. I could get used to it.
–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 primarily with Senators Thom Tillis (R-N.C.) and Angela Alsobrooks (D-Md.), who reached a preliminary agreement with White House officials in March 2026 to resolve disputes over performance in the bill.
This agreement has not yet been formalized and requires input from the banking and crypto industries before passing through the Senate Banking Committee, where it has faced delays since January. White House crypto advisor Patrick Witt noted that additional work was needed on the bill’s wording, leaving the timeline undetermined.
The Senate Banking Committee’s situation is further complicated by the GENIUS Act ban, which protects bank-aligned members. Any amendment to allow yields in the CLARITY Act would require committee members to vote to expand the functionality of the stablecoin beyond the limits set by the GENIUS Act.
Although the Blockchain Association described recent discussions at the White House as a step toward bipartisan consensus, achieving true consensus within the committee remains a challenge.
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Disclaimer: Coinspeaker is committed to providing unbiased and transparent reporting. This article is intended to provide accurate and current information, but should not be considered financial or investment advice. Because market conditions can change quickly, we encourage you to verify the information for 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 mechanics. Hailing from crypto since 2017, Daniel leverages his experience in on-chain analytics to write evidence-based reports and in-depth guides. He holds certifications from the Blockchain Council and is dedicated to providing “insight gain” that overcomes market hype to find real utility for blockchain.
