WASHINGTON, D.C. — A federal economic analysis finds that banning interest payments on stablecoins is unlikely to significantly boost bank lending, while imposing measurable costs on consumers.
What This Means for You
- The policy is expected to increase lending only marginally, by about 0.02%
- Consumers may lose access to interest earnings on digital dollar holdings
- The overall economic cost of the rule is estimated to outweigh its benefits
The analysis, released by the White House Council of Economic Advisers, examines a provision in the 2025 GENIUS Act that prohibits stablecoin issuers from offering yield, or interest, to users holding digital dollar tokens.
What the Policy Does
Stablecoins are digital tokens designed to maintain a fixed value—typically one dollar—backed by reserve assets such as cash or short-term government securities.
Under the law, issuers must fully back each token with reserves and are barred from paying interest directly to holders. The policy is intended to prevent consumers from moving money out of traditional bank accounts into higher-yielding digital assets, which could reduce banks’ ability to lend.
Key Findings on Lending
The analysis finds that eliminating stablecoin yield increases bank lending by approximately $2.1 billion, or about 0.02% of total loans.
Large banks account for roughly 76% of that increase, while community banks contribute about 24%, or roughly $500 million in additional lending.
Even under more extreme assumptions—such as rapid growth in stablecoin adoption and major shifts in financial conditions—the report finds lending gains would remain limited relative to the size of the banking system.
Why the Impact Is Limited
Researchers found that most stablecoin reserves remain within the financial system rather than being removed from it.
Only a small share of reserves are held in forms that cannot be used for lending, while the majority are invested in assets like Treasury securities that ultimately cycle back into banks.
In addition, banks often respond to deposit inflows by increasing reserve buffers rather than expanding loans, which further reduces the policy’s effect on credit availability.
Costs to Consumers
The analysis estimates the policy results in a net economic cost of about $800 million annually, primarily due to consumers losing access to interest earnings on stablecoin holdings.
That produces a cost-benefit ratio of 6.6, suggesting the economic trade-offs may outweigh the gains in lending.
Broader Economic Context
The findings also note that stablecoins provide benefits beyond yield, including faster payments and global accessibility, particularly for users outside the United States.
The analysis concludes that concerns about stablecoins significantly reducing bank lending are not supported at current market levels, with only modest effects observed under typical conditions.
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