The American Bankers Association (ABA) has criticized a White House report that claimed banning stablecoin yields would only have a negligible impact on banks, arguing that the conclusion was reached by asking the “wrong question.”

The White House’s Council of Economic Advisers claimed in a research paper on Wednesday, on the “Effects of Stablecoin Yield Prohibition on Bank Lending,” that under a baseline scenario, banning stablecoin yield may only increase bank lending by $2.1 billion, representing a marginal net increase of about 0.02%.

ABA chief economist Sayee Srinivasan and vice president for banking and economic research Yikai Wang said in a statement on Monday that the “live policy concern” is not whether prohibiting yield on stablecoins would impact bank lending but whether allowing yield on stablecoins would encourage deposit outflows, particularly from community banks.

Srinivasan and Wang said that even if total deposits in the banking system remain unchanged, more funds would likely move from smaller banks to large institutions, which would raise the funding costs of community banks and reduce local lending.

Some of these smaller banks may not have enough balance sheet flexibility to absorb these outflows without resorting to higher-cost wholesale borrowing, the pair said.

Members of the crypto and banking industries have met to negotiate provisions in a Senate bill that will outline how crypto is policed ahead of a potential markup this month, with a key sticking point being language around banning stablecoin yield payments.

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The ABA’s concerns reflect a Treasury paper in April 2025 that estimated widespread stablecoin adoption could lead to $6.6 trillion worth of deposit outflows from the US banking system.

ABA admits stablecoin rewards are more attractive

Despite the fears, the ABA economic researchers acknowledged that households and businesses would be financially incentivized to move funds out of banks in pursuit of higher-paying stablecoins.

Coinbase CEO Brian Armstrong is among the crypto industry leaders who have criticized banks for paying near-zero interest on deposits for decades, arguing that stablecoin yield would force banks to compete on a more level playing field.

The ABA represents some of the banking industry's biggest names, including JPMorgan Chase, Goldman Sachs and Citigroup.

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