White House economists from the Council of Economic Advisers have reported that prohibiting cryptocurrency platforms from offering yields on stablecoin deposits would have little meaningful impact on protecting community bank lending. The analysis, published today, argues such a ban would forgo consumer benefits from competitive returns. This positions the council against banking industry efforts to close perceived loopholes through the pending Clarity Act legislation.
White House economists oppose banning yield on stablecoin deposits according to a new report. The Council of Economic Advisers found this prohibition would not meaningfully protect community banks.
The council stated the conditions for a positive welfare effect from a ban are implausible. “In short, a yield prohibition would do very little to protect bank lending, while forgoing the consumer benefits of competitive returns on stablecoin holdings,” its report said.
This marks the latest development in a notable conflict between the banking and crypto industries. The debate is expected to be formalized in the upcoming Clarity Act.
The legislation aims to close a perceived loophole by either banning third-party stablecoin rewards or establishing them as legal. A recent proposal sought to bar crypto platforms from offering such rewards directly or indirectly.
The Council of Economic Advisers sits within the executive office of the White House. The current administration has been known as favorable to the crypto industry.
