CLARITY Act: Bankers Push Back on White House Stablecoin Yield Report

• White House report says yield limits have minimal impact, but banks warn of risks to funding stability and deposits.
• Bankers argue deposit flows shift structure, pressuring smaller institutions reliant on stable retail funding.
• Coinbase supports findings, while lawmakers push for clarity as stablecoin rules remain unresolved.

A White House report released on April 8 has intensified debate over stablecoin yield under the CLARITY Act. According to journalist Eleanor Terrett, banking sources rejected the findings, arguing they overlook funding risks. The Council of Economic Advisers said yield limits would not significantly curb deposit flight, sparking immediate disagreement.

Banking Sector Flags Deposit Stability Concerns

According to Terrett, early reactions from banking circles suggest the report failed to address core concerns. A banking source said the issue goes beyond deposit levels and focuses on how funds move. Notably, smaller institutions face greater exposure to sudden outflows.

However, the report concluded that restricting stablecoin yield would only marginally increase lending. Bankers disagreed and emphasized that funding stability remains the priority. They argued that deposit shifts directly influence pricing and long-term lending structures.

Deposit Flows And Funding Structure Debate

Bankers also stressed that deposits do not move in a one-to-one pattern. While the report noted that stablecoin reserves often return to banks, their form changes. This shift, they said, alters how credit is funded and deployed over time.

Additionally, community banks rely heavily on stable retail deposits and lack diverse funding options. As funds move toward stablecoins or larger banks, pressure could build on smaller institutions. However, these effects may not appear immediately in aggregate lending data.

This disagreement continues to shape negotiations between banking groups and crypto firms. Both sides interpret the findings differently, keeping the CLARITY Act discussions unsettled.

Coinbase And Lawmakers Offer Contrasting Views

Meanwhile, Coinbase Chief Policy Officer Faryar Shirzad described the report as a net positive. He said the findings confirm that stablecoins do not threaten community banks. He also emphasized that rewards remain important for consumer benefits.

In contrast, lawmakers continue to push for legislative clarity. Senators Thom Tillis, Bill Hagerty, and Cynthia Lummis had requested the report to guide discussions. Treasury Secretary Scott Bessent urged Congress to act quickly, citing limited Senate floor time.

According to WSJ, Bessent warned that delays could hinder regulatory clarity. He highlighted rising crypto adoption and noted that nearly one in six Americans owns digital assets.

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