In a recent statement, Brian Armstrong, the CEO of Coinbase, has called for immediate legislative changes in the United States to empower stablecoin holders with the ability to earn ‘onchain interest’ on their digital assets. In a post shared on social media platform X on March 31, Armstrong argued that the regulatory framework surrounding cryptocurrency should align more closely with traditional banking systems, allowing crypto companies to share interest benefits with consumers.
Armstrong emphasized that this change would promote a more equitable market structure, enabling all regulated stablecoins to offer interest directly to consumers in a manner similar to conventional savings and checking accounts.
Onchain Interest: A Catalyst for Economic Growth
The proposition of allowing onchain interest is not merely a benefit for individual consumers; Armstrong posited that it could significantly enhance the overall US economy. He pointed out that while stablecoins have successfully digitized fiat currencies, the capability to generate interest on these assets would unlock their full potential, providing economic benefits on multiple fronts.
Currently, the standard interest yield on a savings account is approximately 0.41%. Armstrong argued that if stablecoin issuers could legally pay interest, consumers would likely see yields around 4%, vastly improving their financial returns.
Furthermore, he articulated that onchain interest could foster global adoption of US dollar stablecoins, thereby incentivizing the repatriation of dollars back to US treasuries and reinforcing the dominance of the dollar in an increasingly digital global economy. This widespread adoption could lead to more spending, saving, and investing activities, which in turn would fuel economic growth in every local market where stablecoins are utilized.
Despite the potential benefits, current legislative efforts—specifically two competing federal 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—do not currently permit stablecoins to offer interest to consumers. The STABLE Act, in its present form, even includes prohibitions against this practice.
The GENIUS Act has recently progressed through the Senate Banking Committee but has also been amended to exclude interest-bearing instruments from its definition of a ‘payment stablecoin.’ There are indications that both bills may converge in further drafts, reflecting a shared goal among lawmakers to advance stablecoin legislation that ultimately benefits both consumers and the economy.
As the landscape of cryptocurrency evolves, the question remains—will the legislative process embrace the potential of onchain interest to enhance the financial capabilities of stablecoin holders? The answer could have profound implications for the future of digital currency in the United States.
