FOR IMMEDIATE RELEASE: May 5, 2026
CONTACT: Jarice Thompson, jarice@ourfinancialsecurity.org
New Report Debunks Misleading White House Analysis on Stablecoin Yield
The White House wants to prioritize crypto industry profits over community lending and financial stability
Washington, D.C. – Today, Americans for Financial Reform Education Fund and Lee Reiners, Lecturing Fellow at Duke University, released “A Model Built to Mislead: Why the CEA’s Stablecoin Analysis was Rigged.” This report details the gaps and flaws in recent White House analysis that offers misleading conclusions about the impact of stablecoin yield, to the detriment of consumers, real economy businesses, and financial stability.
Read the full report here.
A debate is raging over how crypto legislation will treat the matter of crypto platforms offering their customers lucrative returns (known as yield) in exchange for the use of their stablecoins for staking and lending purposes. Recently, the White House Council of Economic Advisers (CEA),working in the context of President Trump and his families; deep ties to, and business interests in, the crypto industry, produced a report that arguing that stablecoin yield activities would have only minimal impacts on bank deposits and community lending, coming down squarely on the side of crypto interests. This report details the flaws in the CEA analysis, which fits a larger pattern of skewed analysis by the CEA to advance political objectives.
“The CEA’s analysis is deeply flawed and understates the impact of stablecoin growth on the financial system. More importantly, it reflects a broader pattern of questionable assumptions, foregone conclusions, and conflicts of interest at the CEA under President Trump,” said Lee Reiners, lead report author and Lecturing Fellow at Duke University. “Policymakers should act decisively to prevent the significant threats posed by unchecked stablecoin yield activities, or risk allowing a drain on community lending and greater financial instability.”
The CEA’s analysis:
- Fails to take into account that significant growth in stablecoin markets -enabled by the legislation under consideration and many other legislative and regulatory changes – would create concomitantly greater displacement in bank deposits
- Glosses over the crypto industry’s incentives towards and longstanding pattern of offering higher but riskier returns to customers through similar yield generating deals;
- Fails to consider how stablecoin issuer’s reliance on the sale and purchase of assets like Treasuries and reverse repurchase agreements for reserves could leach deposits from community banks; and
- Ignores how such reliance could concentrate risk in money market funds and the Fed’s balance sheet, raising financial stability concerns.
Last week, Senators Tillis (R-NC) and Alsobrooks (D-MD) released updated legislative text that proposes a “compromise” on yield, in an effort to move the crypto market structure bill forward. But, as detailed in the report, the compromise ignores the realities of how stablecoins are used to facilitate risky leveraged activities, and could supercharge the conditions that lead to less lending for communities and more financial instability.
“Crypto billionaires have repeatedly tried to gain preferential treatment that further enriches them, regardless of the risks and threats to household economic security, and financial stability.” said Mark Hays, report co-author and Associate Director for Crypto and Fintech Policy at Americans for Financial Reform Education Fund and Demand Progress. “It will hurt all of the rest of us if they get away with it.”
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