Following several requests from the United States Senate Banking Committee to investigate stablecoins, the White House Council of Economic Advisers (CEA) has published a study confirming that stablecoins and their derivatives do not threaten banking.
According to the report, removing interest on stablecoins would increase bank lending by 0.02% (about $2.1B), while increasing consumer spending to $800 million.
Stablecoin yields bring less risk to bank deposits
The report assumed a worst-case scenario in which the stablecoin market grew to nearly seven times its current size, its reserves were not lent, and the Federal Reserve abandoned its monetary policies.
In such an “impossible” scenario, bank lending would only grow by 6.7% ($129B). The study also found no problem that the benefits were good with the stablecoin ban.
Financial experts he added fears of a “mass exodus” from banks were “very low,” knowing that most stablecoin reserves remain in traditional banks. Unlike the FDIC (Federal Deposit Insurance Corporation) which has just been released. instructionsthe report concluded:
“In short, restricting yields will not protect bank lending, leaving consumers benefiting from competitive returns in the stablecoin industry.”
Source: Whitehouse.gov
Coinbase, banking, and human activity
Coinbase, which is a key player in the development of crypto policy, noted that its officials are very supportive of the White House’s findings. Chief Policy Officer Faryar Shirzad said the report is consistent with other previous assessments that also concluded:
“Stablecoins are an opportunity not a threat.”
That said, banks remain uncertain, according to one insider. The source said that even if the stablecoin reserves return to the bank, “they will not return in the same way.” In addition, the source said that the yield of stablecoins could lead to large outflows from banks, forcing institutions to reorganize their entire lending system to be more sustainable.
The community response is very supportive of the White House investigation, because it agrees set up all over the world stablecoins. This research is now a key element of the CLARITY Act, which is waiting to receive a signal in April and move to the Senate in May.
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