Coinbase CEO Urges U.S. to Allow Interest on Stablecoin Holdings

Coinbase CEO Brian Armstrong is urging U.S. lawmakers to modernize stablecoin regulations, advocating for consumers’ right to earn interest on their stablecoin holdings.

He argues that the current legal framework is outdated and prevents users from benefiting from the interest generated by the reserve assets backing these digital currencies. Armstrong envisions stablecoins functioning more like interest-bearing checking accounts, but existing laws hinder this possibility.

According to Armstrong, although the technology to distribute interest from reserve assets to users already exists, stablecoins don’t qualify for exemptions under U.S. securities laws. As a result, while stablecoins like USDC and USDT are backed by secure assets such as U.S. Treasury bonds, any interest earned typically goes to the issuing company rather than the stablecoin holders. This limitation, Armstrong suggests, puts stablecoins at a disadvantage compared to traditional banking products.

The call for regulatory change comes amid stalled progress on stablecoin legislation in Congress. Lawmakers have been debating issues like issuer oversight, reserve transparency, and potential risks to the financial system, but no clear consensus has been reached. Armstrong believes that allowing users to earn interest on stablecoins would be a game-changer, making these assets more competitive and appealing.

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Industry leaders, including Armstrong, have consistently pushed for clearer crypto regulations in the U.S., warning that regulatory delays could stifle innovation and push developments to more crypto-friendly regions. While Europe and Asia have recently made strides in creating stablecoin-friendly policies, the U.S. continues to lag behind, leaving the status of interest-bearing stablecoins uncertain.

If the U.S. were to adopt regulations allowing stablecoin interest payments, it could transform the perception and use of digital dollars, making them a viable alternative to conventional bank deposits and accelerating crypto’s integration into the mainstream financial system.

Alexander Stefanov