I just noticed something interesting happening in Washington regarding stablecoins and yields. The dispute between the White House and American banks has reached a very critical stage, and the truth is that each side says the other is asking the completely wrong question.

It all started on April 8, when the Council of Economic Advisers issued a report saying that banning stablecoin yields would affect bank loans by only $2.1 billion—which is less than 0.02% of total loans. The message is clear: there’s no need to worry about deposit runs. But the American Bankers Association said no—you’re looking at the wrong question.

American banks say the problem isn’t what would happen if we banned the yield, but what would happen if we allowed it. Imagine the stablecoin market growing from $300 billion today to $1–2 trillion. At that scale, the yield becomes a magnet that pulls deposits from small and medium local banks, raises their funding costs, and reduces local lending. According to their calculations, a state like Iowa alone could lose between $4.4 billion and $8.7 billion in funding.

This dispute isn’t academic—it’s blocking the CLARITY Act, which is supposed to comprehensively regulate cryptocurrencies in America. Even Coinbase withdrew its support for the bill when it tried to impose restrictions on rewards. Treasury Secretary Bisnet is urging Congress to move now, but American banks say policymakers are getting a false sense of security from the White House report.

Ultimately, whichever economic framework wins will determine whether yield-bearing stablecoins become broadly legal or not. And now Congress is faced with two completely competing arguments, with a decision coming soon.