Banks Warn Stablecoins Pose New Risks, Reject White House Findings

Major U.S. banks disagree with White House report claiming stablecoins pose minimal risk, say they could weaken bank funding and financial stability.

Apr. 9, 2026 at 8:48am

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A cinematic close-up of a complex network of metal gears, cogs, and levers, representing the inner workings of a financial institution. The image conveys a sense of power, precision, and industrial might, capturing the scale and complexity of modern banking systems.The intricate machinery of traditional banking faces new challenges from the rapid growth of stablecoins, which could disrupt funding and financial stability.Washington Today

Major U.S. banks have rejected a recent White House report that labeled stablecoins as low-risk, warning that the rapidly growing digital assets could pose challenges to bank funding and financial stability. Banks say the White House analysis fails to fully capture the long-term structural risks of stablecoins, especially for smaller financial institutions that rely heavily on local deposits to fund loans. They argue that restricting stablecoin yields could lead to deposit outflows that make it difficult for community banks to access credit, potentially undermining the economy's financial stability.

Why it matters

As stablecoins continue to scale rapidly, processing trillions in annual transactions, their growing role in global payments is raising concerns among traditional financial institutions. Banks warn that the shift of deposits into stablecoins could weaken their funding, especially for smaller lenders that depend on local deposits to make loans to families and small businesses. This could lead to liquidity stress, higher borrowing costs for customers, and potential financial instability if large-scale stablecoin withdrawals occur.

The details

According to the White House report, banning stablecoins from paying yield would have very little effect on bank deposits or lending, increasing bank lending by just $2.1 billion or 0.02% of the $12 trillion loan market. However, banks have rejected these conclusions, arguing that the report fails to capture the impact on smaller financial firms that rely heavily on local deposits. They say stablecoins can weaken funding for these institutions, as people move deposits into the digital assets, forcing them to limit lending, sell assets quickly, or take expensive loans to stay liquid. Banks want lawmakers to set clear rules for stablecoins, including requirements for reserves and stress testing, as well as transparency on holdings, risks, and deposit usage.

  • The White House released a report on stablecoins in April 2026.

The players

White House

The executive office of the President of the United States that released a report on the risks and impacts of stablecoins.

U.S. Banks

Major traditional financial institutions in the United States that have rejected the White House's findings on stablecoins and warned of the risks they pose to bank funding and financial stability.

Faryar Shirzad

The Chief Policy Officer at Coinbase, a cryptocurrency exchange, who said stablecoins allow users to earn rewards safely and offer banks new opportunities if the rules are clear.

Senators Thom Tillis, Bill Hagerty, and Cynthia Lummis

U.S. Senators who asked the White House to provide a report to guide discussions on stablecoin regulation, as both banks and crypto firms recognize the value of clear rules but still need to agree on the details.

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What they’re saying

“Stablecoins allow users to earn rewards safely and offer banks new opportunities if the rules are clear.”

— Faryar Shirzad, Chief Policy Officer, Coinbase

What’s next

Lawmakers and regulators are expected to work on setting clear rules for stablecoins, including requirements for reserves, stress testing, and transparency, in order to address the concerns raised by traditional financial institutions.

The takeaway

The growing popularity of stablecoins is creating new challenges for the traditional banking system, as banks warn that the shift of deposits into these digital assets could weaken their funding, especially for smaller lenders, and potentially undermine financial stability. Policymakers will need to carefully balance the risks and opportunities presented by stablecoins as they work to develop a regulatory framework.