White House Report Downplays Stablecoin Interest Ban for Banks
Summary
The ABA Banking Journal reports on a White House report that downplays risks to banks from paying interest on stablecoins. The report suggests that allowing banks to offer stablecoin interest payments does not pose significant systemic risk. Banks and fintech companies offering stablecoin services should monitor this policy development as Congress continues to consider stablecoin legislation.
What changed
The White House report finds that permitting banks to pay interest on stablecoins does not present significant systemic risk to the financial system. The assessment downplays calls from some quarters for an outright ban on interest payments related to stablecoin holdings.\n\nBanks and fintech companies involved in stablecoin services should track this development as Congress continues to debate stablecoin legislation, including the STABLE Act and other proposals. While this report takes a permissive stance, regulatory requirements for stablecoin issuers and servicers remain under active development.
What to do next
- Monitor for updates on congressional stablecoin legislation
- Track regulatory developments from banking agencies on stablecoin guidance
- Review stablecoin product offerings for compliance with emerging policy
Archived snapshot
Apr 9, 2026GovPing captured this document from the original source. If the source has since changed or been removed, this is the text as it existed at that time.
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White House report downplays risk to banks from stablecoin interest payments
April 8, 2026 Reading Time: 1 min read A prohibition on paying interest or yield on payment stablecoins would do “very little” to protect bank lending “while forgoing the consumer benefits of competitive returns on stablecoin holdings,” according to a new report by the White House Council of Economic Advisors.
The Genius Act prohibits interest payments on payment stablecoins, but the American Bankers Association and others have raised concerns about a potential loophole that would allow issuers to circumvent the prohibition through third-party rewards. The council report is only the latest to explore the potential effects of allowing stablecoin interestment payments: The Treasury Department has estimated that $6.6 trillion in bank deposits could be at risk. ABA has called on lawmakers to use the proposed Clarity Act to close the loophole and shared a state-by-state breakdown of potential deposit outflows if the change is not made.
The council, using its own model, estimated that eliminating the prohibition would only increase bank lending by $2.1 billion, or 0.02%. Most of that lending would go to large banks rather than banks with less than $10 billion in assets. The report did not measure or evaluate the negative impact on bank lending if stablecoin yield were allowed.
“The yield prohibition in the Genius Act — and its proposed reinforcement through the Clairty Act — may be motivated by the concern that competitive stablecoin returns will draw deposits out of the banking system and contract lending. Our model shows that this concern is quantitatively small,” the report concludes.
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