White House economists downplay stablecoin yield risk, reviving CLARITY Act momentum

White House economists say allowing stablecoin rewards would barely affect banks. The CEA projects just a $2.1B change in bank lending, contradicting industry warnings that have stalled the CLARITY Act in the Senate Banking Committee since January 2026 (BSCNews citing Bloomberg).

The Council of Economic Advisers’ April 9 analysis pegs the effect at ~0.02% of loans outstanding, disputing deposit‑flight scenarios pushed by bank lobbyists (BSCNews).

It also challenges the ICBA’s claim of a $1.3T small‑bank deposit loss if yields are allowed. The report instead models a $2.1B lending uptick under a ban, and in an extreme case a $531B lending increase, with 76% accruing to large banks and ~$129B to community banks, undercutting the ICBA’s protection argument (Coinspeaker).

Policy backdrop. The GENIUS Act (July 2025) mandates 1:1 reserves and blocks issuers from passing reserve yield to holders. Exchanges were not explicitly covered, enabling Coinbase to offer rewards on USDC balances (Coinspeaker).

The CLARITY Act would extend the yield ban to exchanges. Coinbase withdrew support; the bill has sat in committee since January. Treasury Secretary Scott Bessent urged a markup, saying “now is the time to act” (Bessent).

Crypto response. Coinbase CLO Paul Grewal called the CEA findings decisive and criticized efforts to suppress them. He separately lauded recent agency process moves as proper APA rulemaking (Grewal; Coinspeaker).

Market impact for issuers. If Congress permits yield pass‑through, Circle, Coinbase, and Paxos could offer stablecoin returns competitive with money market funds, potentially reshaping USDC’s positioning and stablecoin market share trends seen in early 2026 (Coinspeaker).

Senate dynamics. Senators Thom Tillis and Angela Alsobrooks reached a preliminary yield compromise with the White House in March, but language remains unresolved and the timeline is open‑ended. Any change that permits yields would push members to expand functionality beyond the GENIUS Act’s limits (Coinspeaker).

Key takeaways for crypto investors
- CEA projects minimal banking impact from stablecoin rewards: ~$2.1B, 0.02% of loans (BSCNews).
- ICBA’s $1.3T deposit‑loss claim is disputed by the CEA’s modeling (Coinspeaker).
- A yield pass‑through would sharpen competition among Circle, Coinbase, and Paxos; a ban would preserve the GENIUS Act status quo (Coinspeaker).