TLDR
- Brian Armstrong, the head of Coinbase, supports legislative reforms that would let stablecoin owners gain 'onchain interest'.
- Currently, existing laws, specifically the STABLE Act and GENIUS Act, do not allow stablecoins to offer interest.
- Armstrong highlights that, compared to the typical 0.41% yield on savings accounts, consumers could potentially gain a higher return of about 4% yield.
- Providing onchain interest could help maintain the US dollar's dominance globally and provide economic benefits to the United States.
- Stablecoin issuers already invest in US Treasuries but usually keep the interest themselves rather than sharing it with holders.
Coinbase's CEO, Brian Armstrong, is advocating for amendments to stablecoin regulations to enable holders to earn interest on their digital assets, similar to how traditional banks offer interest.
On March 31st, Armstrong posted on a platform called X, insisting that stablecoin makers should have the freedom and motivation to share interest earnings with their users, aligning with the free-market principle.
— Brian Armstrong (@brian_armstrong) March 31, 2025
In the US legislative pipeline are two rival stablecoin bills: the Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act and the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act.
None of these legislative proposals currently support interest-bearing stablecoins; the STABLE Act explicitly bars 'payment stablecoin' issuers from sharing interest.
Similarly, the GENIUS Act, which recently received approval from the Senate Banking Committee with an 18-6 vote, omits interest-bearing aspects from its definition of 'payment stablecoin.'
Armstrong underscores that while stablecoins have modernized the dollar and other fiat currencies, adding onchain interest could allow both the everyday person and the US economy to fully capitalize on its advantages.
He has drawn attention to the disparity between potential yields and what consumers typically receive. By allowing legislative changes for interest payments, American consumers might see yields upwards of 4%.
This rate would significantly outpace the standard average savings account interest, noted by Armstrong as 0.41%. With inflation near 3%, many Americans are losing purchasing power with traditional savings.
Why Stablecoin Interest Matters
Stablecoin issuers currently utilize US Dollar reserves in stable investments like short-term US Treasuries, but unlike traditional banks, they tend to keep the earned interest instead of passing it to the holders.
Armstrong describes onchain interest as the potential for a stablecoin to operate like a bank account, letting the holder collect interest earned from reserve assets.
The Coinbase CEO suggests that onchain interest could help the US economy by encouraging widespread use of dollar-pegged stablecoins, potentially expanding dollar influence in a digital world.
He also argues that higher yields than traditional savings accounts would mean more available funds for people to spend, save, or invest, which fuels economic growth where stablecoins circulate.
Armstrong cautioned that without integrating onchain interest, the US risks missing out on a massive influx of global users and substantial financial flows.
The drive towards yield-earning stablecoins has also received backing from other leaders in the crypto sphere. Matt Hougan, Chief Investment Officer at Bitwise, aligned with Armstrong’s views, questioning the opposing stance towards interest-bearing options.
Hougan addressed concerns that yield-offering stablecoins might impact bank deposits and mortgage offerings, arguing that a free market would adapt to provide customers with alternative borrowing options.
Armstrong presents the debate as a matter of fairness, emphasizing that consumers deserve to enjoy a larger share of financial benefits, which would necessitate improvements and keep innovative processes domestic.
Experts in regulation note that interest-bearing stablecoins could undergo stricter scrutiny because of their resemblance to securities, which may explain current legislative hesitance to include interest features.
Representative Bryan Steil talked about how the STABLE Act is currently undergoing changes and expects both legislative proposals to be fine-tuned to become complementary as drafts pass through the House and Senate.
Steil mentioned the recognition of collaboration with Senate colleagues to advance the legislation concerning stablecoins.
Armstrong views the present time as a pivotal opportunity to revamp the financial landscape, especially with a government supportive of crypto innovation actively shaping stablecoin rules.
Armstrong contends that policymakers face a choice: to update the financial systems to benefit the public or to maintain outdated models that benefit intermediaries.
The Coinbase leader particularly focused on the worldwide reach of yield-accruing stablecoins, highlighting how it could facilitate access to US dollars or viable alternatives for people in regions with unstable currencies.
Armstrong proposed that permitting interest-bearing stablecoins would be the gateway for numerous global users to integrate into an accessible financial system, merely with internet access.
Virtual transactions mean no physical visits to bank branches, and reduced excessive fees, leveling financial access for all through blockchain technology, Armstrong wrote in his post.
