The American Bankers Association (ABA) has pushed back against a White House report suggesting that banning stablecoin yields would have minimal impact on banks, arguing the analysis misses the core issue.
A research paper from the White House’s Council of Economic Advisers, titled “Effects of Stablecoin Yield Prohibition on Bank Lending,” estimated that prohibiting stablecoin yields would increase bank lending by just $2.1 billion—around a 0.02% rise under its baseline scenario.
However, ABA chief economist Sayee Srinivasan and vice president Yikai Wang argued in a statement that the real policy question isn’t the effect of banning yields, but whether allowing them would accelerate deposit outflows—especially from community banks.
They warned that even if overall deposits across the banking system remain stable, funds could shift from smaller banks to larger institutions. This dynamic would raise funding costs for community banks and potentially reduce lending at the local level.
According to the ABA, some smaller banks may lack the balance sheet flexibility to absorb such outflows, forcing them to rely on more expensive wholesale funding sources.
Representatives from the crypto and banking sectors have met to negotiate key provisions in a Senate bill that will define how the industry is regulated, ahead of a possible markup later this month. One major point of contention is language around banning yield payments on stablecoins.
The concerns raised by the American Bankers Association (ABA) echo findings from a US Treasury paper published in April 2025, which estimated that widespread stablecoin adoption could trigger as much as $6.6 trillion in deposit outflows from the US banking system.
ABA acknowledges appeal of stablecoin yields
Despite its concerns, the ABA conceded that both households and businesses would have strong financial incentives to move funds out of traditional banks in search of higher returns offered by stablecoins.
Brian Armstrong, CEO of Coinbase, has been among those criticizing banks for offering near-zero interest on deposits for decades, arguing that stablecoin yields could push banks to compete more fairly.
The ABA represents several of the largest institutions in the banking industry, including JPMorgan Chase, Goldman Sachs and Citigroup.
