The American Bankers Association has issued a sharp warning against the White House's stablecoin analysis, arguing that policymakers are dangerously underestimating the systemic risks. In a direct challenge to the Council of Economic Advisers, the ABA contends that prohibiting yield on certain stablecoins could trigger significant disruptions to bank lending and broader credit markets—contradicting the administration's assessment that such measures would have minimal impact.

ABA Pushes Back On CLARITY Act Analysis

According to the American Bankers Association’s statement released on Monday, April 13, the “live” question for policymakers is not whether banning yield on payment stablecoins would change lending in the near term. 

Instead, the ABA says the central concern is what happens if yield on payment stablecoins is allowed—particularly whether it would encourage deposit flight, with the potential for deposit outflows to accelerate from community banks. 

The ABA argues that by concentrating on the effects of a prohibition, the CEA paper creates a “misleading sense of reassurance” while sidestepping the more consequential outcome: yield-paying payment stablecoins growing quickly.

In its critique, the country’s oldest national trade association pointed to the CEA’s headline conclusion, which it characterized as an estimate that prohibiting yield would increase bank lending by about $1.2 billion. 

The ABA responded that even if the direction of the estimates were correct, the figure is essentially a “rounding error” compared with typical quarterly shifts in bank lending. 

The association argued that even a directionally correct result still does not answer the key question policymakers need answered: what would be the lending and funding-cost impact of allowing yield as stablecoins expand from today’s market to a much larger one.

Stablecoin Sector To Surpass $1 Trillion?

The ABA emphasized why the size of the market matters. It said the baseline used in the CEA paper—described as an immature stablecoin market of roughly $300 billion—does not match the likely future scale. 

The ABA argued that when the stablecoin market grows to a projected range of $1–$2 trillion, yield would not be a minor feature. Instead, it would be the “mechanism” that could speed up migration out of bank deposits. 

In that larger-market context, the ABA said the credit effects could become economically meaningful even at the level of individual states. It cited its own analysis suggesting a $4–$8 billion reduction in lending in, for example, a single state like Iowa.

The Association concluded by warning policymakers not to take comfort from a study showing that prohibiting stablecoin yield might have a small near-term effect on aggregate lending. The association said that it is not the contested scenario. 

The contested scenario, according to the ABA, is whether allowing yield on payment stablecoins would accelerate deposit migration—again, especially from community banks—ultimately raising banks’ funding costs and reducing local credit availability.

Featured image from OpenArt, chart from TradingView.com