U.S. Stablecoin Rules Risk Handing Digital Finance Ground to Global Rivals

A senior policy executive at Coinbase has raised concerns that Washington may be undermining its own position in digital finance by targeting one of the key features that made stablecoins globally competitive: yield.

According to Faryar Shirzad, proposals that would restrict or effectively ban returns on stablecoins risk stripping U.S.-issued products of a major advantage. Over the past few years, stablecoins tied to the dollar have evolved beyond simple trading tools.

For many users around the world, they function as a digital version of cash, offering returns similar to short-term savings instruments. Remove that incentive, and the appeal of American stablecoins could fade quickly.

A Regulatory Choice With Global Consequences

The implications go further than the crypto sector itself. Stablecoins now sit at the heart of modern payment systems and onchain financial services, especially in regions where traditional banking access is limited or inefficient. If U.S. regulation makes these tools less useful, developers and capital are likely to migrate elsewhere, slowing innovation in areas where the

United States currently holds a lead.

This is where geopolitics enters the picture. China has long been uncomfortable with the worldwide spread of dollar-based digital assets, seeing them as a quiet extension of U.S. monetary influence. If American policy weakens its own stablecoin ecosystem, that pressure eases. In such a scenario, Chinese-linked institutions could promote alternatives, whether through yuan-backed digital currencies or dollar-pegged tokens issued from jurisdictions with looser rules, including Hong Kong.

At home, the push for tougher rules is being driven largely by traditional banking interests. U.S. banks argue that stablecoin rewards resemble interest payments and should therefore fall under existing restrictions, warning that these products siphon deposits away from the banking system. Crypto companies counter that stablecoin yields are not created out of thin air but reflect returns generated by safe underlying assets, passed through to users via software rather than branch networks.

Shirzad has repeatedly framed this clash as more than a regulatory technicality. In his view, digital finance is now part of a broader technological rivalry, and choices made in Washington will shape who sets the standards globally. Limiting domestic innovation, he argues, does not reduce systemic risk. Instead, it pushes influence offshore, potentially handing strategic ground to competitors at a time when financial infrastructure is becoming increasingly digital and borderless.

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