Coinbase CEO Calls for US Stablecoin Legislation to Boost Economy

Coinbase CEO Brian Armstrong has advocated for the adoption of stablecoin legislation in the US that would allow users to earn on-chain interest, asserting that such a move would significantly benefit the US economy. In a recent post on the social media platform X, Armstrong highlighted the growing popularity of dollar-backed stablecoins and the potential economic advantages they could bring if legalized to pay on-chain interest.

Armstrong emphasized that stablecoins have already achieved a product-market fit by digitizing the dollar and other fiat currencies. However, he noted that a critical component is missing: the ability for stablecoins to function as interest-bearing checking accounts, which he refers to as 'on-chain interest.' This feature would allow stablecoin holders to directly receive interest earned on reserve assets, thereby enhancing their spending power and economic benefits.

According to Armstrong, legalizing on-chain interest for stablecoins could bring several economic benefits. It would increase the spending power of users, bolster stablecoin issuers who purchase US Treasury bills to maintain a 1:1 peg to the dollar, and potentially make stablecoin issuers the largest holders of US Treasuries. This would not only pull more dollars back to US Treasuries but also extend the dominance of the US dollar in the global economy. Armstrong warned that without this change, the US could miss out on billions of potential users and trillions in cash flows.

Armstrong acknowledged that the technology for on-chain interest-paying stablecoins already exists. However, current laws make it impractical to implement. Unlike traditional interest-bearing checking and savings accounts, stablecoins do not benefit from the same exemptions under securities laws, which impose onerous disclosure requirements and tax implications. Armstrong argued that stablecoins should be able to pay interest like ordinary savings accounts, without the burdensome regulations currently in place.