Coinbase CEO Calls for Stablecoin Interest to Boost Yields, Promote Financial Inclusion

Coinbase CEO Brian Armstrong has called for legislative updates to allow stablecoin holders to earn on-chain interest. In a recent post, Armstrong argued that current laws unfairly restrict stablecoin providers from sharing earnings with users, despite these digital currencies being backed 1:1 by the U.S. dollar in low-risk American Treasuries. He believes that the returns from these holdings should be passed on to stablecoin holders.

Armstrong framed his appeal as a means to promote financial inclusion and economic expansion. He highlighted that interest-bearing stablecoins could offer consumers significantly better yields than traditional savings accounts, which currently provide an average return of just 0.41%. Armstrong believes that allowing issuers to distribute interest directly would benefit American consumers and the broader economy.

Armstrong has long advocated for a free market approach to financial regulations, believing that banks and crypto firms should operate under the same laws. He has criticized what he sees as government favoritism toward traditional banking institutions, asserting that such policies limit innovation and consumer choice. Armstrong also noted that stablecoins already play a critical role in digitizing the USD and other national currencies. He said legalizing stablecoin interest would empower individual holders and boost America’s global financial influence. He encouraged lawmakers crafting pending stablecoin legislation, like the STABLE Act or the GENIUS Act, to include on-chain interest, considering this feature a fundamental component of stablecoin policy.

Armstrong outlined the broader economic advantages of integrating on-chain interest into stablecoin regulation. He argued that allowing stablecoin interest strengthens the American economy by increasing the use of dollar-backed stablecoins worldwide. This could increase demand for U.S. Treasuries, strengthening dollar dominance in the digital financial system. Furthermore, Armstrong emphasized that the ability to earn interest increases consumers’ disposable income, creating a positive effect by boosting local economies where stablecoin use is widespread. The Coinbase CEO warned that without these changes, the United States risks missing billions in potential financial flows and innovation, potentially losing its edge in financial innovation.

Despite Armstrong’s push for changes benefiting stablecoin holders, legislative progress remains uncertain. Currently, the proposed STABLE Act and the GENIUS Act both impose restrictions on interest-generating stablecoins. The STABLE Act explicitly prohibits stablecoin issuers from offering yield, while the GENIUS Act was revised to exclude such instruments from its definition of a “payment stablecoin.” Broader financial policy discussions further complicate these regulatory obstacles. Some lawmakers support stricter oversight of stablecoin issuers, placing them under rules like the Bank Secrecy Act. Others believe this would put unfair limits on companies. Meanwhile, figures have connected stablecoin legislation to political and corporate interests, adding another layer of complexity.

As discussions about stablecoin regulation advance, Armstrong’s advocacy highlights the tensions between innovation and regulation within the crypto space. He remains firm in his belief that permitting on-chain interest is not only a step toward financial fairness but also a way to maintain U.S. leadership globally. The outcome of these legislative debates will have far-reaching consequences. If lawmakers implement Armstrong’s suggestions, stablecoin holders could soon see their digital dollar instruments yield meaningful returns. However, if restrictive policies remain in place, the crypto industry could explore alternative jurisdictions more favorable to innovation.