Catenaa, Monday, January 05, 2025-A Coinbase executive warned that restricting interest on US dollar stablecoins could give China a strategic advantage, as the country moves to pay interest on its digital yuan.
Faryar Shirzad, Coinbase’s chief policy officer, said in a post on X that US lawmakers risk weakening the competitiveness of domestic stablecoins if negotiations over the GENIUS Act overly restrict rewards. China’s People’s Bank will allow commercial banks to pay interest on the e-CNY starting January 1, 2026, marking a shift from digital cash to “digital deposit currency” to boost adoption.
The GENIUS Act, passed in July, bars US-issued stablecoins from offering direct yield, aiming to keep them focused on payments.
Shirzad said enforcing the ban too strictly could favor foreign stablecoins and central bank digital currencies, giving global rivals a significant edge.
Crypto firms and industry groups have urged Congress to maintain some flexibility for US stablecoins.
A December 18 letter from the Blockchain Association and more than 125 participants argued that restricting rewards would undermine US competitiveness and cited no evidence that yield-bearing stablecoins threaten community banks.
Banking groups, including the American Bankers Association, have taken the opposite stance, calling for strict enforcement of the GENIUS Act to prevent crypto exchanges from offering reward-like incentives that could disrupt traditional banking operations.
Shirzad said tokenization represents the future of money and praised the GENIUS Act as a framework to ensure US stablecoins remain a primary settlement instrument.
He emphasized that lawmakers must protect the primacy of the US dollar and financial system rather than entrenched incumbents.
