April 10, 2026
Onย Aprilย 8,ย theย White Houseย Council of Economicย Advisersย (CEA)ย providedย new analysisย on theย relationship between stablecoin adoption andย bank lendingย (see chart). The central issueโwhether certain third parties can offer yield-like rewards on stablecoinโis currently under consideration for the CLARITY Act in the US Senate.ย Theย CEAย analysis makesย aย fewย key points.
First, stablecoins offer distinct benefits.ย Theyย are an efficient medium of exchange,ย providingย โtransactional utility through instant, 24/7 settlement on a global ledger, bypassing the delays of legacy payment rails.โย They are alsoย an effective store of value and function as โsafe assets.โย Because GENIUS Act-compliant stablecoins are fully backed by reserves, stablecoin adoptionย couldย alsoย improveย USย financial stability on the margin,ย โby shifting some deposits into stablecoin backed by cash reserves, it may insulate the payment system against runs and nudge traditional banking toward less risky behavior.โ
Second, stablecoin adoptionย is unlikely to change the quantity of deposits in the banking system.ย This is aย textbookย economic issue.ย Think about it this way: if you withdraw funds from your bank account to buy a stablecoin, the stablecoin issuerย mustย invest those funds into its reserves.ย Ifย the issuer buysย a Treasury billโone of the qualifying assets for GENIUS Act-complaint stablecoin reservesโtheย cashย ends upย back in the banking system asย a deposit of the dealer that sold it.[i] Quantitative analysis in the CEA report findsย small benefits and meaningful costsย to the economyย from limiting stablecoin rewards. We think the argument could have goneย evenย further: Federal Reserve policyย determinesย theย rateย of creditย growthย in the economy, not the relative size of intermediaries in the payments system.
Separately, Treasury Secretary Scott Bessent penned anย op-edย in the Wall Street Journalย encouraging the US Senate toย immediatelyย pass the CLARITY Actย (the House version passedย last July on a bipartisan basis).ย The next phase of blockchain adoption will come fromย โtokenized assets, decentralized exchanges and new means of capital formation,โย he argues, andย failing to offerย regulatory clarity in the US will drive this activity to offshore marketsย that offer clear rules. We agree.
Key Takeaway:ย Regulatory clarity is driving institutional adoption of digital assets.ย Last yearโs GENIUS Act on stablecoins was a big step forward.ย Vocal support andย high-quality analysis from the White Houseย may help push the CLARITY Act over the line.
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