White House official argues stablecoins channel foreign capital into US banks

White House advisor says stablecoins add deposits to US banks, not drain them.

Patrick Witt, executive director of the White House Council of Advisors for Digital Assets, argued that foreign demand for dollar-backed stablecoins issued by US firms drives funds into domestic banks. He posted the view on X amid debate over the CLARITY Act and the GENIUS Act.

“Global demand for USD is massive,” Witt wrote. He said foreigners swap local currency for US-issued stablecoins, and those reserves sit as bank deposits or Treasuries. Background on reserves from Brookings.

Community banks pushed back. Christopher Williston of the Independent Bankers Association of Texas warned on X that giving ground in CLARITY talks could hit local lending and output.

The macro backdrop is tense. The US Dollar Index fell to 95.818 on January 28, a four-year low, then rebounded to 99.468, up about 3.80%. It gained 0.46% over the last five days before publication, per TradingView data, with context from FXStreet.

Witt’s bottom line: foreign stablecoin demand is “net new capital entering the American banking system.” Whether Congress accepts that and advances the CLARITY and GENIUS bills remains undecided.