- The American Bankers Association (ABA) responds to a White House Council of Economic Advisers (CEA) report on stablecoins for payment.
- The AMA statement criticizes CEA for underestimating large-scale deposit shifts.
- All of this intensifies the controversy over the law of clarity.
The White House Council of Economic Advisers (CEA) recently released a report on stablecoin payments, and now major banking groups are pushing back. The American Bankers Association (ABA) responded today and said regulators are missing the biggest risks.
According to the ABA, high-yield stablecoins can take significant amounts of money out of community banks, make them more expensive to operate and limit their ability to provide loans locally.
the answerwritten by Chief Economist Sai Srinivasan and Vice President Yekai Wang, suggests that the CEA is focusing on the wrong issue. The CEA report mainly looked at whether banning interest (yield) on stablecoins would lead to an uptick in bank lending.
The report that was released estimated a modest increase of $1.2 billion. However, the ABA believes that this view is too narrow and does not fundamentally reflect what could actually happen in the market.
Instead, the ABA highlights a more aggressive scenario. if stablecoins Start offering returns and become more attractive to users, and then the market size can grow. If this happens, a large amount of deposits could then be transferred from traditional banks to these said digital assets.
Debate over revenue ban rages amid push for the Clarity Act
This debate is heating up in Washington with the emergence of rules surrounding stablecoins. after The white house Showing support for yield caps given the Clarity Act momentum, banks issued this response today, April 13, 2026.
In the statement, the ABA warned that “by focusing on the effects of the ban, the CEA paper risks creating a misleading sense of security by avoiding the most important scenario: the rapid expansion of yield-driven stablecoins.”
Banks are also urging policymakers to examine deposit outflows through banks if stablecoins that offer returns are widely adopted.
Community banks face immediate pressure
The response also highlighted that community banks rely on local deposits to lend to households and small businesses. If high-yielding stablecoins attract that money, banks won’t be able to replace it easily.
Furthermore, these banks would then have to rely on more expensive sources of financing such as Federal Home Loan Bank System advances or capital markets, raising borrowing costs for customers.
Even if total deposits across the system remain stable, the impact will be uneven. The ABA says local economies could be affected, estimating that lending in states like Iowa could decline by $4.4 to $8.7 billion if stablecoins expand quickly.
Consensus on migration risks, gaps in bank-level analysis
There is broad agreement across industry and academic research on one key point: offering yield makes stablecoins much more attractive, encouraging people and businesses to move money out of banks, unless rules prevent it.
The American Bankers Association says these funds want to sit with large issuers and not go back to smaller banks, which reduces their lending capacity.
He also criticizes the White House Council of Economic Advisers for treating the banking system as a single, unified entity. In fact, deposit transfers tend to benefit larger banks, leaving smaller community banks struggling and increasing the risk of local credit shortages.
ABA notes narrow banking risks as stablecoin debate deepens
The ABA also warns that these stablecoins can also act like “narrow banking,” where funds are held in reserves but do not support real-world lending. This concern is similar to why policymakers have pushed back on central bank digital currencies, fearing that it would weaken the flow of credit in the economy.
For this reason, the ABA says banning returns on stablecoins is not extreme but a practical option. It will allow stablecoins to grow as payment instruments without directly competing with bank deposits.
As regulation advances in Congress, including under the Clarity Act, this debate highlights the growing gap between cryptocurrency companies and traditional banks.
Final thought
The ABA’s bank response could slow down the Clarity Act because with that response, lawmakers will also have to consider deposit outflows. A major roundtable meeting is scheduled to be held on the 16th of this month, and the debate may rage before a final decision is reached. Although it does not hinder progress, it could lead to more hearings, amendments and negotiations, which could change the timeline for the Clarity Act depending on how quickly consensus is reached.
Read also: The US Cryptocurrency Clarity Act is facing deadline pressure amid delays in the Senate
