Brian Armstrong says enabling stablecoin issuers to pay interest to holders could boost U.S. economic competitiveness and expand dollar dominance in the digital age
Armstrong: Let the Free Market Work—On-Chain
Coinbase CEO Brian Armstrong has called on U.S. lawmakers to modernize financial legislation by allowing stablecoin issuers to pay interest directly to holders onchain—an innovation he says could radically expand consumer benefits, supercharge digital dollar adoption, and fuel global economic growth.
In a March 31 post on X, Armstrong urged Congress to adopt a “free market approach” to stablecoin legislation. He argued that if regulated issuers were legally permitted—and incentivized—to distribute interest to users holding digital dollars on blockchain rails, the U.S. would be well-positioned to lead in the next generation of financial infrastructure.
— Brian Armstrong (@brian_armstrong) March 31, 2025
“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.
The Policy Bottleneck: Two Bills, Zero Interest
Currently, two competing pieces of legislation are in development:
-
The Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act
-
The Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act
However, neither bill currently permits onchain yield. In fact, the STABLE Act explicitly prohibits “payment stablecoins” from distributing interest to holders, while the GENIUS Act, which recently passed the Senate Banking Committee in an 18–6 vote, excludes interest-bearing instruments from its definition of a compliant stablecoin.
That means unless changes are made in upcoming legislative drafts, any stablecoin product offering interest could be treated as a security or an unlicensed banking product, potentially inviting enforcement from the SEC or banking regulators.
Representative Bryan Steil acknowledged in a recent interview that the House and Senate are working to “mirror up” the two bills, suggesting that alignment is possible—but not yet guaranteed.
“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.
Why It Matters: The 4% vs. 0.4% Gap
Armstrong’s argument centers around the disconnect between monetary policy and consumer finance.
In his post, he noted that U.S. consumers earn just 0.41% on average in savings accounts as of 2024, despite interest rates sitting above 5%. In contrast, he claims onchain stablecoins could easily deliver 4% or more in yield by connecting directly to money markets and U.S. Treasuries—without the friction of legacy banks.
“More yield in consumers’ hands means more spending, saving, investing — fueling economic growth in all local economies where stablecoins are held,” Armstrong wrote.
He also positioned the argument geopolitically, suggesting that interest-bearing stablecoins would extend the reach of U.S. dollar dominance, pulling capital into Treasuries and away from alternative digital currencies or central bank digital currencies (CBDCs) being developed in China, Europe, and elsewhere.
The Stakes for Stablecoin Innovation
Stablecoins have already reached product-market fit—used across DeFi, cross-border payments, and emerging markets as dollar surrogates. But Armstrong argues they’ve yet to unlock their full economic potential.
Today, most stablecoins are:
-
Non-interest bearing, limiting long-term holding incentives
-
Regulatory gray zones, especially if they mimic savings products
-
Structurally excluded from mainstream banking logic, due to outdated legal definitions
Allowing regulated stablecoin issuers to offer yield could, in Armstrong’s view, transform them into core financial instruments that bridge the gap between fintech, crypto, and banking.
Independent Take: Financial Inclusion vs. Regulatory Risk
Armstrong’s position highlights an emerging tension: accessibility vs. accountability.
On the one hand, enabling interest-bearing stablecoins would:
-
Democratize yield, especially for unbanked or underbanked populations
-
Make the U.S. more competitive globally, particularly in the face of rising CBDC adoption abroad
-
Reinforce the U.S. dollar’s role as the global default currency
On the other hand, policymakers worry that unsupervised digital yield products could replicate the risks of 2022’s crypto collapse—TerraUSD-style protocols that promised unsustainable returns and triggered contagion.
Regulators also fear that if stablecoin providers begin offering interest, they may effectively become shadow banks, potentially competing with commercial banks without equivalent oversight or capital requirements.
Final Thoughts: Will D.C. Catch Up With the Blockchain Economy?
The U.S. is currently at a crossroads in stablecoin policy. While the private sector has innovated rapidly, federal legislation continues to lag behind the realities of Web3 finance.
Armstrong’s plea is a timely reminder that yield is not just a financial feature—it’s a policy choice. How Congress responds in the coming months will determine whether stablecoins evolve into true economic tools or remain stifled by legacy definitions and risk aversion.
If the U.S. wants to lead the digital currency era, the real question isn’t whether stablecoins can offer interest—but whether regulators will let them.
