ABA Challenges White House Stablecoin Yield Report as Stablecoin Debate Grows

TLDR

• The US began enforcing a naval blockade on Iranian ports on Monday evening.
• Commercial ships may still cross Hormuz if they are not bound for Iranian ports.
• Trump said Iranian vessels near the blockade would be “immediately ELIMINATED.”
• UKMTO said restrictions cover the Arabian Gulf, Gulf of Oman, and Arabian Sea.
• Britain said it will not support the US blockade of Iranian ports.

The American Bankers Association has pushed back against a White House report on stablecoin yields, saying the study addressed the wrong policy issue. The debate centers on whether stablecoin issuers should be allowed to offer yield to users, and how that could affect banks, deposits, and lending. The White House Council of Economic Advisers said banning stablecoin yield would have only a limited effect on bank lending. The ABA said the real concern is what happens if yield-bearing stablecoins are allowed to expand across the market.

ABA says White House focused on the wrong policy question

The White House paper examined the “Effects of Stablecoin Yield Prohibition on Bank Lending.” Under its baseline case, the report said banning stablecoin yield could raise bank lending by about $2.1 billion. That would amount to about a 0.02% net increase, according to the figures cited in the material provided.

The ABA responded by saying this approach does not address the main policy concern. In a statement, ABA chief economist Sayee Srinivasan and vice president for banking and economic research Yikai Wang said the current issue is not whether a ban slightly affects lending. They said policymakers should instead ask whether allowing stablecoin yield would pull deposits out of banks, especially smaller lenders.

The banking group argued that stablecoin yield could encourage users to move funds away from deposit accounts in search of better returns. The ABA said that even if total deposits in the financial system remain steady, the movement of funds away from community banks could still change how local lending is funded.

Community banks remain at the center of the dispute

The ABA said community banks face the greatest pressure in this debate because they rely more heavily on local deposits. If depositors move funds into stablecoins or toward larger institutions, smaller banks may need to replace that funding through higher-cost sources. Those alternatives may include wholesale borrowing or raising rates paid on deposits.

According to the ABA, that change could reduce lending capacity for local borrowers and raise costs for households and small businesses. The group also said some banks may not have enough balance sheet flexibility to handle those shifts without added strain. That concern is part of why the banking industry continues to press lawmakers on stablecoin rules.

The ABA’s position also mirrors a Treasury paper from April 2025, which estimated that broad stablecoin adoption could lead to $6.6 trillion in deposit outflows from the U.S. banking system. That estimate has remained part of the policy discussion as lawmakers and industry groups debate how stablecoins should be regulated and whether they should function mainly as payment tools or as alternatives to bank deposits.

Stablecoin yield becomes a key issue in Washington talks

The disagreement comes as members of the banking and crypto sectors continue talks over Senate legislation that would shape digital asset oversight. One of the central sticking points remains language around stablecoin yield payments. The policy question has gained more attention as the market considers how stablecoins could evolve if issuers are allowed to offer returns directly to users.

The ABA also acknowledged one core market reality. Its economists said households and businesses would likely have a financial reason to move money into higher-yield stablecoins if such products become widely available. That point aligns with criticism from parts of the crypto industry, which has argued that banks have paid very low rates on deposits for years.

Coinbase CEO Brian Armstrong is among those who have argued that stablecoin yield would push banks to compete more directly for customer funds. The ABA, which represents large banks including JPMorgan Chase, Goldman Sachs, and Citigroup, has taken the opposite view on the policy path. As the stablecoin market grows, the split between banks and crypto firms is becoming more visible, and the outcome of that debate could shape the next stage of U.S. digital asset regulation.