Overview
- The Council of Economic Advisers report, released Wednesday, estimates a lending boost of $2.1 billion (0.02%) and a net $800 million loss to users from a full ban on stablecoin yield.
- The model finds most stablecoin reserves are invested in Treasury bills rather than parked as bank deposits, so money used to buy tokens typically cycles back into banks through dealers and redeposits.
- Large banks would capture about 76% of any lending gain, while community banks would add roughly $500 million in loans, or 0.026%, which the report says is too small to justify a ban.
- Even a stacked worst case reaches about $531 billion in extra loans (4.4%) only if the stablecoin market grows sixfold, reserves are held entirely in non‑lendable cash, and the Federal Reserve changes its current framework.
- The GENIUS Act already bars issuers from paying yield, but it leaves room for intermediaries to pass returns through, and the report challenges lobbying by banking groups as Congress weighs CLARITY Act language to close that channel.