The post ABA Warns Yield Stablecoins Could Drain Bank Deposits Fast appeared on BitcoinEthereumNews.com.

The ABA says yield-paying stablecoins could pull deposits from community banks, tighten local lending, and raise funding costs fast. The American Bankers Association is pushing back on a White House economic report about stablecoins. The ABA argues the analysis is asking the wrong question entirely.  Instead of examining what happens if yield is banned, policymakers should focus on what happens if it is allowed.  The group warns that yield-paying stablecoins could trigger rapid deposit flight, especially from smaller community banks. Related reading:  White House Study Debunks Stablecoin Threat to Banks ABA Says CEA Stablecoin Report Misses the Real Risk The President’s Council of Economic Advisers recently published a paper on payment stablecoins. It examined how a yield prohibition might affect bank lending.  The CEA concluded that banning yield would only boost bank lending by about $1.2 billion. The ABA called that figure a rounding error. According to the ABA, the real concern is scale.  Today’s stablecoin market sits at roughly $300 billion. But projections point toward a $1 to $2 trillion market. At that size, yield becomes a powerful pull factor for depositors.  The ABA’s own analysis estimates a single state like Iowa could see $4.4 to $8.7 billion in lost lending as the market grows. 🚨NEW: @ABABankers is pushing back on the White House Council of Economic Advisers stablecoin report, saying the analysis misses the bigger policy concern. They warn that allowing yield could pull deposits from community banks, raise funding costs, and tighten local lending as… — Eleanor Terrett (@EleanorTerrett) April 13, 2026 Deposit Flight Threatens Community Bank Lending Capacity The ABA notes that community banks operate differently from large financial institutions. They lend based on their local deposit base.  When deposits leave, their lending capacity shrinks with them. If yield-paying stablecoins scale quickly, community banks cannot simply…

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Filed under: News - @ April 13, 2026 7:32 pm