Witt Says Stablecoin Yields Will Add Capital to U.S. Banking System
The U.S. House of Representatives passed the CLARITY Act on July 17, 2025, seeking to clarify the division of digital-asset regulatory responsibilities. The GENIUS Act, signed the following day, bars issuers from paying interest directly to holders but leaves room for third-party rewards. The banking industry is therefore concerned that yield-bearing U.S. dollar stablecoins could divert low-interest deposits and erode a key source of lending funds.
Patrick Witt, executive director of the White House Council of Advisers on Digital Assets, said on March 12, 2026, that overseas users who buy U.S.-issued dollar stablecoins with local currencies bring net new funds into the banking system because the reserves are largely held in dollars or U.S. Treasuries. He disputed an April 2025 U.S. Treasury estimate warning that deposit outflows could reach $6.6 trillion. Stablecoin yield provisions in the CLARITY Act remain a key focus of negotiations.
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The history behind this eventAmerican Bankers Association Survey Warns Stablecoin Yields Could Threaten Deposits and Lending
Stablecoins are generally pegged one-to-one to the U.S. dollar and were originally designed for payments and trade settlement. The GENIUS Act, enacted in the United States on July 18, 2025, bars issuers from paying interest directly, but whether platform rewards amount to indirect yield remains a point of contention in the CLARITY Act debate. The American Bankers Association, or ABA, argues that an outflow of money from banks could weaken deposit-funded community lending, citing a Treasury Department estimate that $6.6 trillion in deposits could be at risk.
On June 3, 2026, the ABA released an online survey of 2,000 U.S. adults conducted by Morning Consult, with a margin of error of about plus or minus 2 percentage points. If stablecoin yields were to reduce community lending, 57% of respondents would support a congressional ban and 19% would oppose one. Some 69% were concerned that banks would have less money available to lend, 61% favored a cautious legislative approach, and about 30% planned to buy or use digital assets within the next year.
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