The American Bankers Association (ABA) has locked horns with White House economists over the potential fallout from banning yield payments on payment stablecoins. At the heart of the debate is whether such a move would destabilize community banks, with the ABA warning of unintended consequences while the White House downplays the risks.

A recent 21-page analysis by the Council of Economic Advisers (CEA) suggests that prohibiting stablecoin yields would have minimal impact on bank lending—just a 0.02% boost to a $12 trillion loan portfolio. The report estimates consumers would lose $800 million in returns, with lost yields outweighing benefits by a 6.6-to-1 ratio. Yet, the CEA maintains that fears of mass deposit flight are overblown.

Stablecoins, which peg their value to assets like Treasury bills, have become a flashpoint in the broader crypto regulatory landscape. The GENIUS Act, set to take effect in 2025, could reshape how these digital assets operate—and who benefits from their growth.