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- Coinbase CEO Brian Armstrong calls for legislative changes to allow onchain interest for stablecoin holders, boosting financial innovation.
- Onchain interest could offer higher yields (4%) compared to traditional savings accounts (0.41%).
- The STABLE and GENIUS Acts are at odds, with neither allowing interest-bearing stablecoins.
Coinbase CEO Brian Armstrong has urged US lawmakers to implement legislative changes that would allow stablecoin holders to earn “onchain interest” on their holdings. Armstrong’s call highlights a crucial turning point in the evolution of digital assets, pushing for a policy shift that could enhance the financial freedom of stablecoin users while reinforcing US dollar dominance in the global economy.
On March 31, Armstrong took to X (formerly Twitter) to advocate for a regulatory framework that allows stablecoin issuers to share interest with consumers, much like traditional banks do with savings accounts. He emphasized that the current regulatory landscape prevents stablecoin holders from fully benefiting from their digital assets, arguing that allowing onchain interest would align with free-market principles and financial innovation.
*”Stablecoins have already found product-market fit by digitizing the dollar and other fiat currencies, but allowing them to generate onchain interest would unlock their full potential,”* Armstrong stated.
His argument is centered around the idea that crypto companies should not be restricted from offering financial incentives to their users, especially when banks currently provide similar services. By opening the doors to onchain interest, Armstrong believes the US can foster a competitive and innovative financial ecosystem.
Coinbase Weighs In on STABLE Act and GENIUS Act Impact
At the heart of this debate are two competing bills: the STABLE Act, emphasizing stricter oversight, and the GENIUS Act, promoting innovation. Their outcome could shape the future of stablecoins and digital assets.
Both bills aim to establish regulatory clarity for stablecoins, but neither currently permits interest-bearing stablecoin accounts. The STABLE Act explicitly prohibits stablecoin issuers from offering yield to holders, while the GENIUS Act has been revised to exclude interest-bearing instruments from its definition of “payment stablecoin.”
Despite these limitations, Armstrong sees a unique opportunity for the US to “level the playing field” by ensuring that regulated stablecoins can offer the same financial benefits as traditional savings accounts.
One of Armstrong’s most compelling arguments is the potential financial impact on everyday consumers. He noted that if regulatory changes allowed stablecoin issuers to pay interest, US consumers could earn a yield of around 4% on their holdings. This is significantly higher than the current 2024 average savings account interest rate of 0.41%.
The implications of such a shift are enormous. Higher yields mean more disposable income, increased spending, greater financial inclusion, and a more robust economy. Armstrong envisions a future where stablecoins not only act as a digital dollar but also serve as a powerful wealth-building tool for millions of Americans.
Coinbase Pushes for Onchain Interest to Boost Dollar Dominance
Beyond benefiting individual consumers, Armstrong argues that enabling onchain interest could have a profound impact on the global economy. By making US dollar-backed stablecoins more attractive, their demand would rise worldwide, driving greater adoption in global trade, increasing inflows into US treasuries as a preferred savings tool, and further strengthening dollar dominance in an increasingly digital economy.
If the US fails to act, Armstrong warns that other countries and competing digital assets will seize the opportunity, drawing financial activity away from the US and limiting its influence over the future of digital finance.
“If we don’t unlock onchain interest, the U.S. misses out on billions more USD users and trillions in potential cash flows,” he cautioned.
Despite Armstrong’s strong push, both the STABLE Act and the GENIUS Act remain at a crossroads. Representative Bryan Steil, speaking on the Crypto in America podcast, hinted at a possible reconciliation between the two legislative proposals, stating that the differences are “textual rather than substantive.”
As lawmakers continue to refine these bills, Armstrong’s advocacy may prove to be a crucial catalyst for change. With consumer interest, economic growth, and the future of the US dollar at stake, the debate over onchain interest is only just beginning.
Related | California Lawmaker Pushes for Stronger Crypto Investor Protections in New Bill
