A new White House report has delivered a sharp blow to banking industry efforts to tighten the stablecoin yield prohibition inside the Digital Asset Market Clarity Act of 2025 (the CLARITY Act).
Released on April 8 by the Council of Economic Advisers, the study concludes that banning yields, including those offered through platforms and affiliates, would deliver almost no meaningful boost to bank lending while costing consumers real benefits.
CLARITY Act Yield Fight: The Numbers Are Tiny
According to the White House baseline model, extending the GENIUS Act issuer-level ban through the CLARITY Act to cover exchanges and third parties would increase total bank lending by just $2.1 billion. That’s a tiny 0.02% of outstanding loans.
Of that modest gain, roughly 76% would flow to the biggest banks. Community banks (those with under $10 billion in assets) would pick up only about $500 million more in lending capacity, an increase of just 0.026%.
Even if you throw in every aggressive assumption favorable to the banks, explosive stablecoin growth, reserves locked entirely in cash instead of Treasuries, major shifts in Fed policy, and more, the maximum additional lending across the entire system tops out at $531 billion, or about 4.4% of 2025Q4 loan volumes. For community banks, the best-case boost under these implausible scenarios is still only 6.7%.
The report puts it bluntly:
“In short, a yield prohibition would do very little to protect bank lending, while forgoing the consumer benefits of competitive returns on stablecoin holdings.”
Why This Report Hits CLARITY Act Negotiations Hard
Right now, the CLARITY Act sits at the center of the stablecoin yield debate in Congress. The GENIUS Act, signed into law in July 2025, already prohibits issuers from paying direct interest or yield. What remains up for grabs in the CLARITY Act is closing the so-called three-party model loophole, stopping exchanges, brokers, and affiliates from offering rewards or returns that feel economically equivalent to interest on stablecoin balances.
Banking lobbyists have fought hard for this tighter restriction, claiming it’s critical to protect deposits and lending, especially at smaller institutions. But the White House analysis undercuts that argument with clear data. It estimates a net welfare cost of around $800 million in the baseline scenario, with a cost-benefit ratio of 6.6.
As Senate negotiators hammer out final language ahead of potential markups, this report hands crypto and fintech advocates fresh ammunition: the proposed yield restrictions in the CLARITY Act offer minimal protection for banks at a steep price for innovation and consumer choice.
CLARITY Act Implications: Protectionism or Progress?
For the wider digital asset world, the findings make one thing clear. Stablecoins are a payments innovation, not an existential threat to traditional fractional-reserve banking. Competitive returns on stablecoins can easily coexist with, and even support, the existing financial system.
Disruption Banking has followed this tug-of-war for months. The CLARITY Act was supposed to bring much-needed regulatory certainty and help the U.S. stay competitive globally in digital assets. Slipping in overly restrictive yield language that delivers just 0.02% more lending would work against that goal, tilting toward protectionism instead of real market clarity.
The numbers are now on the table. Lawmakers finalizing the CLARITY Act need to decide whether those marginal gains for banks are really worth limiting consumer benefits and fintech competition.
The next move belongs to Congress.
See Also:
White House Push: CLARITY Act at 90% Odds | Disruption Banking
