Coinbase CEO Brian Armstrong calls for stablecoin legislation enabling interest payments to users.
He argues that onchain interest could counteract inflation and boost purchasing power. Coinbase CEO Brian Armstrong is calling on U.S. lawmakers to favor stablecoin legislation that allows holders to earn interest. He claimed that onchain interest would benefit consumers, enhance financial inclusion, and bolster the U.S. economy.
In a post on March 31, Armstrong explained that stablecoins are already functioning as digital dollars. However, because of uncertainty in law, such interest sharing by issuers with users would result in the applicability of securities law. Hence, he believes that lawmakers should revise those laws so that banks and crypto firms can compete fairly.
A Fairer Financial System
Armstrong pointed out the financial chasm faced by consumers: The Federal Funds rate had an average of 4.75% in 2024, with most savings accounts paying less than 0.5%. A few offered as little as 0.01%. With inflation at 3%, purchasing power has already eroded away for many Americans.
He wants to allow onchain interest to offer the public access to market rate yield. Furthermore, people may safeguard and accrue wealth without reliance upon banks. He also stressed that billions of people globally are excluded from proper financial systems. Interest-bearing stablecoins could provide financial services that are instantaneous and completely transparent.
Armstrong pointed out that stablecoin issuers are the major purchasers of U.S. Treasury bonds. Paying interest will bring more global demand for dollar-backed assets. This could bolster the dollar’s position and stimulate economic growth. He argued for renewal, saying that raising interest rates would increase consumer spending, saving, and investments.
Stablecoin Regulation Face Legislative Barriers
Lawmakers are now considering two stablecoin bills: the STABLE Act and the GENIUS Act. Both bills would classify stablecoin issuers as financial institutions subject to the Bank Secrecy Act (BSA). Some contend that this framework is antiquated.
According to the current versions of the bills, however, interest-bearing stablecoins are not among the permitted ones. The STABLE Act explicitly prohibits issuers from paying interest. The GENIUS Act recently passed through a Senate Banking Committee vote but likewise does not permit interest-bearing stablebacks.
Armstrong warned that not allowing onchain interest will see a lost opportunity for the U.S. to attract huge financial flows. He urged Congress to act quickly in ensuring new regulations permit stablecoin issuers to legally share interest.
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