White House Backs Crypto Yield as Trump Family's Stablecoin Venture Stands to Profit

The White House just handed the crypto industry a major win -- and Trump's own family business stands to cash in.

In a report released Wednesday, the Council of Economic Advisers rejected claims from traditional banks that allowing crypto exchanges to pay yield on stablecoins would devastate their deposit base. The economists found that even if regulators banned stablecoin rewards entirely, banks would only gain $2.1 billion in deposits -- a measly 0.02% increase.

"In short, a yield prohibition would do very little to protect bank lending, while forgoing the consumer benefits of competitive returns on stablecoin holdings," the report states.

The analysis directly contradicts lobbying from the banking industry, which has warned that small banks could lose over $1.3 trillion in deposits if customers move their money to crypto platforms offering better returns. Banks wanted Congress to ban third-party companies like exchanges from paying interest on customer stablecoin holdings.

The Trump Family Angle

The White House's pro-crypto stance comes as the Trump family's own cryptocurrency venture, World Liberty Financial, positions itself to profit from exactly this kind of regulatory framework. The venture sells crypto tokens and operates in the stablecoin ecosystem -- the same market that would benefit from rules allowing yield payments.

Critics have called World Liberty Financial a pay-to-play scheme, arguing the Trumps are using the presidency to enrich themselves through unregulated financial instruments while shaping the very rules that govern those instruments.

The Clarity Act Standoff

At the center of this fight is the Clarity Act, a landmark bill that would establish comprehensive federal regulation of digital assets. The legislation has been stuck in limbo since January, when Coinbase -- the largest U.S. crypto exchange -- pulled its support over language that could ban stablecoin yield.

Coinbase allows customers to earn rewards on USDC, a popular stablecoin, and has argued that prohibiting yield would be fundamentally unfair to consumers. The exchange's chief legal officer, Paul Grewal, celebrated Wednesday's White House report on social media: "The most respected economists in the government found nothing that shows rewards cause deposit 'flight.' Facts are hard sometimes."

The banking lobby sees it differently. They argue that allowing crypto platforms to pay competitive interest rates would siphon deposits away from community banks, which rely on those deposits to fund loans to local businesses and homeowners.

What the Data Shows

The White House report examined actual stablecoin flows and found they're concentrated at large financial institutions on both sides of the market. Researchers found no significant relationship between stablecoin growth and changes in community bank deposits.

"Altogether, the empirical evidence suggests that our own model overstates an already small effect of stablecoin yield on community banks," the economists wrote.

The Genius Act, a separate stablecoin bill, already banned stablecoin issuers themselves from paying yield to customers. But it left unclear whether third-party platforms could offer those rewards -- a loophole the banking industry now wants closed.

Deal Nearly Done

Despite the deadlock, industry insiders say passage of the Clarity Act is imminent. Stephan Lutz, CEO of crypto exchange BitMEX, called it "practically inevitable" this week. Reports earlier this month indicated senators had reached agreement on compromise language that would satisfy both banking chiefs and crypto executives.

President Trump has publicly urged regulators to finalize the bill, aligning himself with the crypto industry's position on yield. That's hardly surprising given his family's financial stake in the outcome.

The White House report provides political cover for lawmakers to side with crypto companies over traditional banks. Whether that's sound policy or simply convenient for the Trump family's business interests remains an open question -- one that won't be answered by economists alone.