Yield Finds a Way: Stablecoins at 2x Bank Rates

The White House kills the talking point

On April 8, the White House Council of Economic Advisers published a report: "Banning stablecoin interest would boost bank lending by just $2.1 billion. That's 0.02% of the total."

Consumers would lose $800 million from the ban. Banks would gain a fraction of that. The math isn't close.

For two years, banks have told Congress that allowing stablecoin interest would trigger a $6.6 trillion deposit exodus. The White House just put numbers to that claim, and it collapsed.

Washington lines up

That same week, Treasury Secretary Bessent pushed for the CLARITY Act, which would classify crypto as commodities rather than securities. The SEC and CFTC chairs backed it. Even the Coinbase CEO, who had opposed the bill twice, flipped.

The Senate returns April 13 with CLARITY markup on the calendar. It's the last real legislative window before November midterms.

This happened before

To understand why banks are fighting this hard, rewind to the 1970s.

The U.S. capped bank deposit rates at 5.25%. Market rates blew past 10%. Keeping money in a bank meant losing purchasing power.

In 1971, two fund managers created the Reserve Fund — the world's first money market fund. Pool small investors' cash, buy high-yield Treasuries, pass the interest through. It wasn't a bank, so the rate cap didn't apply. The return was double what any bank could offer.

By 1980, money market fund assets had exploded from $3.6 billion to $61 billion. Banks fought back with free toasters for new accounts. It didn't work.

Same script, fifty years later

The banking lobby's argument then was identical: "If deposits leave, lending dries up and the economy collapses."

The American Bankers Association is running the same playbook in 2026, almost word for word.

It didn't work then either. In 1980, Congress phased out rate caps over six years. Banks didn't collapse. They were forced to compete, invented money market deposit accounts, and survived.

Regulation can delay competition. It has never killed what the market actually wants.

Small scale, structural edge

Money market funds were born in a regulatory gap. Today they're a $7.9 trillion industry. When the Iran war scare hit in March, $49 billion poured in within a single week — an all-time record. That's the kind of muscle this asset class has now.

Total stablecoin supply is $315 billion, about 4% of that. Stablecoins sit roughly where money market funds sat in 1975. Early, small, growing fast.

But the structural advantage is different this time.

Money market funds ran on U.S. business hours for U.S. investors. Stablecoins run 24/7, across every border, on a phone. Circle already has the interest payout infrastructure in place. USDC hit 64% of all stablecoin volume in Q1, passing Tether for the first time.

What banks actually fear

If interest authorization and CLARITY pass together, stablecoins go head-to-head with bank deposits.

Fifty years ago, money market funds competed for American savings. Stablecoins compete for the world's. Someone in Lagos earning dollar yield without a bank account is no longer hypothetical.

What banks fear hasn't changed in half a century. Not the technology. The deposits walking out the door. Every attempt to stop that with regulation has failed.

Every single time.

Not investment advice. Not a shareholder of any mentioned entity.