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A White House crypto advisor said stablecoins could increase deposits in U.S. banks.
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The argument challenges claims that stablecoins drain liquidity from banks.
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GENIUS Act rules require stablecoins to be fully backed by cash-like reserves.
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The debate continues to influence broader crypto legislation.
Stablecoins Could Attract Global Capital
Patrick Witt, executive director of the President’s Council of Advisors for Digital Assets, argued that stablecoins could strengthen the U.S. financial system by attracting international capital.
Witt said stablecoins that comply with the GENIUS Act framework could create deposit inflows into the U.S. banking system.
According to his argument, global users exchanging local currency for dollar-backed stablecoins issued by U.S. firms effectively channel new capital into American financial institutions.
Debate Over Stablecoin Yields Continues
Traditional banking groups have warned that stablecoins offering rewards or yield could draw deposits away from banks.
However, crypto industry advocates argue that such concerns overlook how stablecoin reserves are structured. Under the GENIUS Act, payment stablecoins must be backed one-to-one by cash or highly liquid assets, limiting how issuers can use the underlying funds.
The debate over stablecoin rewards remains a key obstacle in negotiations over broader crypto legislation, including the proposed CLARITY Act.
