I just read something completely unexpected from the White House economic report—and honestly, it overturns many assumptions that spread rapidly in Washington.

The story starts from last summer, when an economist proposed a staggering figure: if interest could be paid on stablecoins, bank loans worth $1.5 trillion could disappear. That number went everywhere and was used by banking lobby groups as a powerful weapon, leading to an explicit ban in the law that prevents stablecoin issuers from paying any yields.

The logic seemed convincing—if you can earn interest from stablecoins, why would you deposit your money in a bank? But a recent report from the Council of Economic Advisers says: wait a moment. The actual number is closer to just $2.1 billion. The difference? About 700 times!

Here’s the exciting part—most people didn’t understand what is actually happening to the money. When someone buys a stablecoin, the issuer takes that money and invests it in U.S. government bonds. That money doesn’t disappear from the banking system; it circulates within it in a different way. Tether and Circle alone control 80% of the market, and according to reports, only a very small portion of their reserves exists as bank deposits.

If you track the money precisely—which is what the report did—you’ll find that even the $54 billion that could flow back to banks due to the lack of yield, only 12% of it actually affects banks’ ability to lend. The remaining 88% was already circulating in the bond market before and after the ban.

Then there are other barriers—banks hold reserves, and the Federal Reserve maintains ample liquidity. After passing through all these layers, the actual impact drops to just $2.1 billion.

But there’s another angle many people overlooked—more than 80% of stablecoin transactions take place outside the U.S. Ordinary people in countries with unstable currencies use dollar-pegged stablecoins as a savings tool and for transferring money. These users genuinely support demand for U.S. Treasury bonds. If the ban reduces reliance on stablecoins, the costs of financing U.S. bonds could rise already.

When you calculate the real cost of the ban versus the interest, the ratio reaches 6.6—meaning the cost is 6.6 times greater than the interest. Stablecoin holders lost an annual return of about 3.5%, and the loss in welfare is about $8 billion per year.

The core problem with the original $1.5 trillion calculation is that it applied a model designed for central bank digital currencies to stablecoins, without tracking where the money actually goes. That is a microeconomic mistake versus a macro one—treating the loss of one bank as a loss for the entire system.

So what’s the conclusion? The real impact of stablecoins on banks is not tied to paying interest, but to the share of reserves that are held as bank deposits—at 100%. Bitcoin in dollars and other digital assets are also seeing similar debates about regulation and the real economic effects.

A law that has no clear party benefiting from it—but has a clear party harmed by it—that’s what makes this report worth serious consideration.