Banks Battle White House Over Stablecoin Yield as CLARITY Act Markup Looms
Banks are fighting the White House directly over stablecoin yield rules, and the fight is now threatening to delay the CLARITY Act’s Senate Banking Committee markup, currently targeted for late April 2026. The American Bankers Association fired back on April 13 against a Council of Economic Advisers paper that concluded banning stablecoin yield would raise bank lending by just $2.1 billion, roughly 0.02% of a $12 trillion loan book. The ABA says the CEA asked the wrong question entirely.
ABA’s $6.6 Trillion Deposit Flight Warning
ABA chief economist Sayee Srinivasan and banking research VP Yikai Wang argued that the real risk is not what happens if yield is banned, but what happens if yield-bearing stablecoins are permitted to scale. The ABA projects the stablecoin market could grow from $300 billion to $2 trillion, with competitive yields on Treasury-backed tokens acting as a direct rival to insured bank deposits. The association warned that lending in states like Iowa alone could contract by $4.4 to $8.7 billion under rapid stablecoin expansion. As the ABA put it, “The CEA paper minimizes the core risk by starting from the wrong question.”
The White House countered that stablecoin issuers recycle reserves into Treasury bills, repos, and money-market funds, keeping aggregate deposits broadly stable. That argument holds at the system level but collapses when you look at individual institutions. Community banks cannot replace lost retail deposits with wholesale funding at equivalent cost, and the ABA is right to push back on that point. The CEA’s macro-level reassurance offers cold comfort to a rural lender watching its deposit base drain to a yield-paying token.
Bitcoin BTC$62,243.00▲1.35%
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BNB BNB$593.66▲0.84%
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Figure Heloc FIGR_HELOC$1.03▲0.49%
Dogecoin DOGE$0.0845▼0.46%CLARITY Act Compromise Still Fragile
White House digital assets adviser Patrick Witt told attendees at the Solana Summit in New York on April 13 that negotiators had reached a workable compromise on yield, though he acknowledged neither side is satisfied. His framing was blunt: “We don’t love this…but we can live with it.” The current draft compromise would ban yield on holdings that resemble deposit accounts while permitting activity-based rewards similar to credit card programs. Banks have not publicly endorsed it, and the Senate Banking Committee has not scheduled a markup hearing as of April 14.
Adding international pressure to the domestic standoff, the Hong Kong Monetary Authority on April 14 granted its first Category A stablecoin licenses to HSBC and Anchorpoint, covering a digital Hong Kong Dollar and a digital US Dollar backed by daily automated proof-of-reserve reporting. While Washington haggles, Hong Kong is issuing licenses to global banks. Senator Cynthia Lummis put it plainly on X: “America needs Clarity. Now or never.” She is correct on the urgency, even if the legislative machinery is not keeping pace. For more on how this yield standoff has been building, see our earlier coverage of GENIUS Act rulemaking and the stablecoin yield impasse. The gap between Washington’s timeline and the rest of the world’s is widening fast, and nobody in that Senate committee should be comfortable with that.
