Coinbase CEO Brian Armstrong has called on U.S. lawmakers to update stablecoin regulations, arguing that consumers should be allowed to earn interest on their stablecoin holdings.
Coinbase CEO Brian Armstrong Pushes for Stablecoin Interest Rights in US Regulation
Armstrong emphasized that the interest earned on the reserve assets backing the stablecoins should be paid directly to users, effectively turning stablecoins into interest-bearing checking accounts, but outdated regulations prevent this from happening.
“The technology already exists, but the law has not caught up with it,” Armstrong said, noting that stablecoins do not currently benefit from exemptions under U.S. securities laws.
Armstrong’s comments highlight a key limitation in the U.S. regulatory framework, where stablecoin issuers are generally restricted from distributing interest to holders.
While stablecoins like USDC and USDT are backed by low-risk assets like U.S. Treasury bonds, the interest earned from these reserves generally goes to the issuer rather than the users.
Proposed stablecoin legislation in the US has stalled in Congress, with debates focusing on issues such as issuer oversight, reserve transparency, and potential risks to financial stability.
Armstrong’s comments suggest that allowing stablecoin holders to earn interest could be a major breakthrough for the industry and could make stablecoins more competitive with traditional banking products.
Armstrong and other industry leaders have been vocal advocates for clearer crypto regulations in the U.S., often warning that regulatory uncertainty could push innovation overseas.
While stablecoin-friendly legislation in Europe and Asia has been making progress in recent months, the US remains stuck in a legal gray area.
The U.S. allowing interest-bearing stablecoins could redefine the role of digital dollars in finance, making them a more attractive alternative to traditional bank deposits and further integrating crypto into the mainstream economy.
*This is not investment advice.
