TLDR
- Brian Armstrong calls for changes to U.S. stablecoin laws to allow “onchain interest” payments
- Current legislation (STABLE Act and GENIUS Act) prohibits interest-bearing stablecoins
- Armstrong claims consumers could earn around 4% yield vs. 0.41% average savings account
- He argues interest-bearing stablecoins would boost dollar dominance globally
- Allowing onchain interest would put more money in consumers’ hands, fueling economic growth
The Push for Interest-Earning Digital Dollars
Coinbase CEO Brian Armstrong has called on U.S. lawmakers to change stablecoin regulations to allow holders to earn interest directly on their digital assets. In a March 31 post on social media, Armstrong argued that crypto companies should be treated like banks when it comes to paying interest to customers.
Currently, two pieces of federal stablecoin legislation are making their way through Congress. These are the Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act and the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act.
Both bills in their current form prohibit stablecoin issuers from paying interest to holders. The STABLE Act specifically includes language that forbids “payment stablecoin” issuers from paying yield to holders.
Similarly, the GENIUS Act, which recently passed the Senate Banking Committee by a vote of 18-6, has been amended to exclude interest-bearing instruments from its definition of a “payment stablecoin.”
Armstrong believes this represents a missed opportunity. He says the U.S. has a chance to “level the playing field” by ensuring these laws allow regulated stablecoins to deliver interest directly to consumers, just like traditional savings accounts.
The Consumer Benefits
According to Armstrong, if stablecoin issuers were allowed to pay interest, U.S. consumers could earn yields of around 4% on their holdings. This would be nearly ten times higher than the 2024 average interest yield on consumer savings accounts, which Armstrong cites as 0.41%.
This gap becomes even more important when considering inflation. With inflation rates near 3%, most Americans are actually losing purchasing power with traditional savings accounts.
Armstrong argues that “onchain interest democratizes access to market-rate yields.” This would give regular people a better chance at maintaining and growing their wealth.
The potential benefits extend beyond U.S. borders. Billions of people in underbanked regions currently have limited access to U.S. dollars or must rely on volatile local currencies.
Interest-bearing stablecoins could provide these people with access to a stable, interest-earning financial system. They would only need an internet connection to participate.
This would eliminate the need for bank branch visits or paying high fees for services like overdraft protection or money transfers. Armstrong describes it as “equal financial access for everyone, powered by crypto rails.”
Economic Advantages for the United States
Beyond consumer benefits, Armstrong suggests allowing interest-bearing stablecoins would bring major advantages to the U.S. economy as a whole.
Stablecoin issuers already rank among the largest buyers of U.S. Treasury bonds. In some cases, they exceed the purchases made by many foreign governments.
If consumers worldwide could earn interest on U.S. dollar stablecoins, Armstrong believes adoption would increase. This would boost demand for Treasury bonds and reinforce the dollar’s position as the world’s reserve currency.
He also argues that more yield in consumers’ hands would result in more economic activity. People would have more money to spend, save, and invest, which would fuel growth in all local economies where stablecoins are held.
Armstrong warns that regulatory inaction could cause the U.S. to miss out on billions of potential stablecoin users. This could mean losing trillions of dollars in potential cash flows.
With a self-described “pro-crypto administration” and Congress working on stablecoin regulation, Armstrong sees this as a pivotal moment. He urges lawmakers to take action to modernize the financial system in ways that benefit consumers.
Representative Bryan Steil has commented on the current state of stablecoin legislation. He told Eleanor Terrett, host of the Crypto in America podcast, that the two competing pieces of legislation are expected to “mirror up” after a few more drafting rounds in the House and Senate.
Steil noted that the differences between the bills are mainly textual rather than about core substance.
“At the end of the day, I think there’s recognition that we want to work with our Senate colleagues to get this across the line,” Steil said.
Armstrong frames the choice clearly in his advocacy. He believes policymakers can either update the system to benefit average people or protect what he calls “an outdated one that enriches middlemen.”
As these bills continue to make their way through the legislative process, the question of interest-bearing stablecoins remains a key point of debate. Armstrong and other crypto advocates will likely continue pushing for changes that would allow for “onchain interest” in the final legislation.
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