Coinbase CEO Urges Lawmakers to Allow Interest on Stablecoins

Coinbase CEO Brian Armstrong has urged lawmakers to support legislation that would allow consumers to earn interest directly from their digital dollar holdings, framing it as a beneficial move for consumers, global financial access, and long-term US economic strength. In a post published on March 31, Armstrong highlighted the need for "onchain interest," a mechanism that would enable holders of fiat-backed stablecoins to receive a share of the yield generated by underlying reserve assets, such as short-term US Treasuries.

While banks currently offer interest-bearing accounts under long-standing regulatory exemptions, stablecoin issuers face legal uncertainty that prevents them from sharing interest with users without potentially triggering securities laws. Armstrong emphasized that consumers deserve a larger share of the financial benefits, stating that opening the door for onchain interest would enhance competition and ultimately benefit consumers, keeping innovation within the US.

Stablecoins, which have gained widespread adoption as a digital representation of fiat currencies, have yet to unlock their full potential for everyday users. Armstrong noted that while the average Federal Funds rate in 2024 was 4.75%, most consumers earned less than 0.5% — and in many cases as little as 0.01% — on their savings accounts. This gap, coupled with inflation near 3%, resulted in a real loss of purchasing power for ordinary Americans. Armstrong argued that onchain interest democratizes access to market-rate yields, giving regular people a fair shot at maintaining and growing their wealth.

Armstrong also pointed to the transformative impact stablecoins could have globally. Billions of people in underbanked regions are currently locked out of US dollar access or are subject to volatile local currencies. By allowing interest-bearing stablecoins, the US could help onboard a new wave of global users into an instant, transparent, and accessible financial system with just an internet connection. This would eliminate the need for branch visits and excessive fees, providing equal financial access for everyone, powered by crypto rails.

Armstrong further emphasized that allowing onchain interest for stablecoins brings a host of potential benefits for US economic policy. Stablecoin issuers already rank among the largest buyers of US Treasuries, surpassing many foreign governments, and are helping to draw more global demand back to dollar-denominated assets. He argued that if consumers worldwide could earn interest on US stablecoins, the resulting increase in adoption would boost Treasury demand, reinforce dollar dominance, and stimulate economic activity through higher consumer spending and investment.

Armstrong warned that regulatory inaction could cause the US to miss out on trillions of dollars in global financial flows. He urged Congress to act swiftly and ensure that new stablecoin legislation includes clear legal provisions allowing regulated issuers to deliver onchain interest without triggering complex disclosure requirements or securities classifications. Armstrong stated that with a pro-crypto administration and Congress actively working on stablecoin regulation, there is a unique opportunity to modernize the system to benefit consumers or protect an outdated one that enriches middlemen.