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ToggleThe traditional banking industry's fears about cryptocurrencies may be exaggerated. A recent report released on April 8 by the White House Council of Economic Advisers provides a clear economic answer to whether stablecoins will disrupt the traditional financial system. The report argues that even if cryptocurrency platforms offer stablecoin yields to users, the negative impact on the overall banking industry will be "negligible."
The ban on new loans only resulted in a $2.1 billion increase in revenue, but community banks did not benefit.
In the current crypto market, models offering stablecoin yields have gradually taken shape. For example, Coinbase, the largest exchange in the United States, offers a yield of approximately 3.5% for certain customers' USDC balances. Traditional banks are generally concerned that if stablecoins can continuously pay interest, it could lead to a large outflow of public deposits, thereby severely weakening banks' lending capacity.
However, White House economists presented specific data in their report to refute this claim. The analysis indicated that even a complete ban on crypto companies offering stablecoin yields to customers would have extremely limited impact on traditional lending, estimating a mere 0.02% increase, totaling approximately $2.1 billion. More importantly, this negligible growth would largely flow to large Wall Street banks, rather than community banks supporting local economies.
This is a slap in the face to Bank of America's warning of a "$6.6 trillion outflow".
This objective data from the White House directly clashes with the pessimistic predictions of traditional financial giants. Prior to this, Bank of America (BoA) had issued a stern warning to the market, claiming that allowing stablecoins to pay yields could trigger a catastrophic outflow of deposits amounting to $6.6 trillion.
The White House Council of Economic Advisers' report undoubtedly contradicted Bank of America's predictions, showing that traditional financial institutions may have overreacted and amplified systemic risks in the face of the rise of stablecoins.
Could a surge in Congressional legislation break the deadlock on crypto legislation?
This debate over "interest-bearing stablecoins" has evolved beyond simple business competition into a core political struggle between crypto companies and the traditional financial industry in the US Congress. Strong opposition and lobbying from traditional banks are one of the major obstacles hindering the broader "Crypto Market Structure Bill."
Now that the White House Council of Economic Advisers has concluded in its official report that the impact of stablecoin yields is limited, this substantial economic analysis is expected to provide the crypto industry with strong leverage in legislative negotiations in Congress. The future direction of the stablecoin regulatory framework deserves continued market attention.
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