The White House Council of Economic Advisers said fears that stablecoins would cause mass bank deposit outflows are significantly overstated.

Council's assessment

The council reviewed multiple scenarios and found that, even in a negative trajectory, the impact on lending would remain limited across the banking sector.

Advisers argued that a prohibition on yields paid by stablecoins would inflict greater economic harm than it would prevent, according to the report.

Reserves and banking links

The report noted that a substantial portion of reserves backing stablecoins is already held within commercial banks, which mitigates the risk of wholesale deposit migration.

Because reserves are mostly interwoven with existing bank liabilities, the immediate threat to bank stability is reduced relative to some public concerns.

Policy considerations

The council emphasized that regulatory responses should weigh potential costs, as blunt restrictions on yields may push activity into less transparent parts of the financial system.

• Fears overstated: Deposit outflow scenarios are smaller than some market narratives suggest.
• Limited lending effect: Even adverse pathways imply constrained impacts on credit provision.
• Reserves inside banks: Existing banking links reduce the likelihood of mass disintermediation.

The White House Council of Economic Advisers presented these findings as part of its evaluation of stablecoin-related risks and possible regulatory approaches.