Key Insights
- Coinbase CEO has criticized efforts to ban stablecoin reward, arguing that it is a competitive advantage.
- Armstrong said stablecoin rewards actually benefit the consumers.
- Stablecoin reward remains a contentious issue in the Market Structure bill as industry continues lobby,
Coinbase CEO Brian Armstrong has criticized recent efforts to ban stablecoin rewards in the US. Armstrong said this in a tweet on X, noting that rewards will make US stablecoins competitive.
His comments add to the growing list of crypto voices who have strongly criticized the big bank lobby against yield-bearing stablecoins.
Armstrong Says Stablecoin Rewards Benefit Ordinary People; Use China as Example
The comment from Armstrong was in response to a statement by Coinbase’s Chief Policy Officer, Faryar Shirzad. Shirzard noted that China had recently announced plans to pay interest on digital yuan.
He explained that this could help the country to finally undermine the US Dollar especially if the Senate agrees to ban stablecoin rewards. One of the key reasons for enabling interest in the Digital Yuan is to boost its adoption as China aims for international usage.
Armstrong agreed with this view, noting that China’s decision to pay interest benefits to ordinary people is a competitive advantage. The Coinbase CEO expressed concern that banning stablecoin rewards could hurt the US stablecoins.
While the GENIUS Act bans interest on stablecoins, it is silent on rewards, creating a loophole that allows exchanges to offer rewards to users. However, US banks have been calling for a complete ban, claiming that it could make customers switch from bank deposits to stablecoins.
However, Armstrong believes these worries are misplaced. According to him, allowing stablecoin yield will not affect lending.
He said:
“I worry we are missing the forest through the trees in the U.S. Rewards on stablecoins will not change lending one bit – but it does have a big impact on whether U.S. stablecoins are competitive.”
Interestingly, the post echoes Armstrong’s previous opinion on the issue even before China announced interest in the Digital Yuan. In September, the Coinbase CEO said on CNBC that the argument of capital flight from banks is a boogeyman.
He later said in late December that US banks will eventually change their position on the stablecoin interest ban. Armstrong wrote on X that banks will eventually be the ones lobbying for yield on stablecoins.
Stablecoin Rewards Still Under Debate As Senate Deliberates on Market Structure Bill
Meanwhile, the decision on whether the US will allow stablecoin rewards remains unknown. According to reports, it is one of the core issues being debated by the Senate Banking Committee even as markup is scheduled for next week.
With senators aiming for bipartisan consensus on the pending issues, concerns abound about whether stablecoin yield could become a sacrificial lamb.
However, crypto advocacy groups and policymakers are already pushing for Congress to support stablecoin rewards. The post by Shirzad is targeted towards this, with the Coinbase policy chief explaining why Congress should protect the rewards.
He noted that the opposition from banks stems from the fact that stablecoins threaten their margins, as they offer substantially low interest on deposits.
Interestingly, crypto advocacy group the Digital Chamber is scheduled to host a fly-in on Capitol Hill by Thursday to lobby legislators. Industry leaders are also reportedly meeting with senators to discuss DeFi and stablecoin yield.
The post Coinbase CEO Argues Against US Banning Stablecoin Rewards appeared first on The Market Periodical.