Effects of Stablecoin Yield Prohibition on Bank Lending
Impact Score: 2.2
Timeline: N/A – No explicit timeline or directive deadline provided, as this is research analysis.
Summary: The GENIUS Act (July 2025) prohibits stablecoin issuers from offering yields to holders to protect traditional bank deposit bases and lending capacity. Models show eliminating stablecoin yields slightly increases bank lending ($2.1 billion baseline), mainly benefiting large banks, but with high welfare costs. Extreme scenarios show higher lending gains but unlikely positive welfare effects. The policy risks reducing stablecoin adoption, potentially shifting consumer banking behaviors and impacting Vanderbilt’s financial aid, research funding, and legal education offerings.
Key Actions: Vanderbilt’s Financial Aid Office should assess impacts on student aid; the Office of Federal Relations must engage policymakers; the Economics Department should research economic effects; Law School to expand cryptocurrency regulatory education; Medical Center to review financing impacts.
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