Coinbase CEO pushes for stablecoin interest to match conventional banking

Coinbase CEO Brian Armstrong is pushing for U.S. lawmakers to amend proposed stablecoin legislation to allow holders to earn interest directly on their digital assets. In a March 31 post on X, Armstrong argued that enabling "onchain interest" would benefit consumers, strengthen dollar dominance, and stimulate economic growth.

Armstrong contends that cryptocurrency companies should be treated similarly to traditional banks when it comes to sharing interest with consumers. "Allowing onchain interest would be consistent with a free market approach," he stated in his social media message.

The CEO’s comments come as two competing federal stablecoin bills move through the U.S. legislative process: the Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act and the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act. Armstrong views this legislative moment as an opportunity to "level the playing field and ensure these laws pave a way for all regulated stablecoins to deliver interest directly to consumers, the same way a savings or checking account can."

Potential Economic Benefits

While acknowledging that stablecoins have already gained market traction by digitizing fiat currencies, Armstrong believes adding interest-earning capabilities would maximize their utility. He claims U.S. consumers could potentially earn yields around 4% on stablecoin holdings—substantially higher than the 2024 average savings account interest rate of 0.41% that he cited.

The broader economic advantages, according to Armstrong, would include expanding global usage of dollar-backed stablecoins, "pulling dollars back to U.S. treasuries and extending dollar dominance in an increasingly digital global economy." He also suggested that higher yields would put more money in consumers’ hands for spending, saving, and investing, thereby fueling economic growth in local economies.

"If we don’t unlock onchain interest, the U.S. misses out on billions more USD users and trillions in potential cash flows," Armstrong warned.

Legislative Roadblocks

Despite Armstrong’s advocacy, neither of the current stablecoin bills supports interest-bearing stablecoins. The STABLE Act explicitly prohibits payment stablecoin issuers from paying yield to holders in its current form.

Similarly, the GENIUS Act, which recently passed the Senate Banking Committee with an 18-6 vote, has been amended to specifically exclude interest-bearing instruments from its definition of "payment stablecoin."

Representative Bryan Steil told podcast host Eleanor Terrett that the differences between the two pieces of legislation are more textual than substantive, and they’re expected to align more closely after additional draft rounds in Congress. "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 stated.

For Armstrong and stablecoin advocates, this legislative development process represents a crucial opportunity to shape the future of digital dollar assets in the American financial system—though the path to interest-bearing stablecoins clearly faces significant hurdles under current proposals.

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