The White House Council of Economic Advisers published a working paper this month estimating that a full ban on passive yield distributions to stablecoin holders — a position favored by some Senate Banking members during GENIUS Act negotiations — would cost U.S. consumers approximately $800 million annually in lost returns. The paper became a meaningful input into the final compromise negotiated into the GENIUS Act's implementation rules, which permit a tightly-bounded form of passive yield while prohibiting structures that economically resemble interest-bearing deposit accounts.
The policy debate had been one of the most contested elements of the GENIUS Act's drafting. Several Senate Banking members, including senior members of both parties, had argued that allowing stablecoin issuers to pass through Treasury-bill yield to holders would create a structurally unfair competitive dynamic with insured bank deposits, where the same consumer interest payment would be subject to a meaningful regulatory and capital cost. The traditional banking industry, represented by the American Bankers Association and Independent Community Bankers of America, had been the most vocal advocate of a complete ban. Crypto industry advocates — most prominently Circle and the Blockchain Association — had argued for the opposite position: that economic value generated from issuer reserves was properly thought of as belonging to stablecoin holders rather than to the issuer's net interest margin.
The CEA's methodology is straightforward but the framing is structurally consequential. The working paper estimates the consumer-yield value of passive distributions by applying a representative weighted-average yield across the existing stablecoin float, net of issuer operating expenses and a reasonable allowance for issuer profit. The headline $800 million figure represents the present-value annualized consumer-welfare cost of foreclosing the passive-yield channel, calibrated against the existing stablecoin market's reserve composition and the prevailing Treasury-bill yield curve. The paper acknowledges the figure scales with both the stablecoin market's growth trajectory and the path of short-term interest rates.
The paper's framing is structurally interesting because it implicitly accepts that passive yield from stablecoin issuers' Treasury reserves is properly thought of as consumer-facing economic value rather than as an unfair subsidy from issuer net interest margin. That framing has been contested in policy circles, particularly among traditional banking-industry advocates who continue to see yield-passing stablecoins as unfair competition with insured deposits. The CEA's adoption of the consumer-welfare lens has shifted the political center of gravity on the issue and provided GENIUS Act negotiators with the analytical foundation for the final compromise.
Industry reaction has been broadly positive but not uniform. Circle and several other major stablecoin issuers welcomed the consumer-welfare framing, which is consistent with their long-standing public position. The American Bankers Association responded with a written critique arguing that the CEA's methodology underestimates the indirect cost to bank-deposit holders of competing yield-bearing alternatives — a counterargument that the CEA's paper does not directly address. Consumer-protection advocacy groups have generally accepted the consumer-welfare framing while pressing for tighter disclosure rules around the specific yield-distribution mechanics that the GENIUS Act permits.
The broader implication is that the consumer-welfare framing has now been officially adopted at the highest level of the executive branch's economic-policy apparatus, which is likely to influence the OCC's implementing rulemaking and the Treasury's subsequent regulatory work. The GENIUS Act's implementation rules, due no later than July 18, 2026, will contain the precise operational definition of permissible passive-yield structures; the CEA paper's analytical framework is expected to be a meaningful input into that definitional work. The next public milestone is the OCC's first proposed implementing rule, expected before year-end, which will be the structural test of how the consumer-welfare framing translates into operational regulatory practice.