Washington, April 9 – A White House economic study has found that banning interest on stablecoins would do little to increase bank lending, challenging a central argument made by traditional banks in the debate over digital assets.
The analysis by the Council of Economic Advisers (CEA) shows that eliminating stablecoin interest would increase lending by just $2.1 billion, or about 0.02 percent, while imposing a net cost of $800 million.
The findings come as policymakers are considering stricter rules on stablecoins under the GENIUS Act, which was signed into law in July 2025. The law requires issuers to maintain one-to-one reserves backing their tokens and prohibits them from offering interest directly to holders.
"Restricting interest on stablecoins may be motivated by the concern that competitive stablecoin returns will draw deposits out of the banking system and reduce lending," the White House study said. "Our model shows that this concern is quantitatively small."
Banks have warned that allowing stablecoins to offer returns could draw deposits away from traditional accounts, weakening their ability to lend. Crypto advocates argue the opposite, saying that such products drive innovation and competition.
The CEA study suggests that the overall impact on lending is limited. A shift away from stablecoins following a ban on interest would move about $54 billion into conventional deposits, but only a small portion of that would translate into new loans.
The report says that most stablecoin reserves are invested in assets such as Treasury bills, which flow back into the banking system. Only a small share – about 12 percent – is held in bank deposits that cannot be used for lending.
Even under extreme assumptions, the effect remains modest. "Even when stacking every worst-case assumption, the model produces only $531 billion in additional aggregate lending," or about a 4.4 percent increase, the study said.
Community banks would see limited gains. The study estimates that they would account for 24 percent of any increase in lending, or about $500 million, equivalent to a 0.026 percent rise.
"In short, a ban on interest would do very little to protect bank lending, while foregoing the consumer benefits of competitive returns on stablecoin holdings," the report said.
The findings could shape ongoing discussions in Congress, where lawmakers are considering whether to expand restrictions on stablecoin interest through proposals such as the CLARITY Act.
Stablecoins – digital tokens pegged to the US dollar – have grown rapidly and are widely used for payments and savings, particularly outside the United States. The market is estimated at about $300 billion.