Coinbase CEO Brian Armstrong Calls China’s Stablecoin Move a Wake-Up Call

TLDR

• China will pay interest on its stablecoin, boosting appeal for users.

• Brian Armstrong says rewards help users and won’t harm bank lending.

• U.S. banks earn $360B annually from deposits and card fees.

• Cornell and CRA studies show no link between stablecoin growth and bank deposits.

Coinbase CEO Brian Armstrong has voiced concern about U.S. regulatory resistance to stablecoin rewards, warning that banning them could weaken the country’s global competitiveness. His comments followed China’s announcement that it would offer interest to users of its central bank digital currency, the Digital Yuan.

Armstrong argued that stablecoin rewards do not reduce lending but can benefit everyday users. He said, “Rewards on stablecoins will not change lending one bit—but it does have a big impact on whether U.S. stablecoins are competitive.”

His remarks come as the U.S. Senate Banking Committee prepares to review the Market Structure bill, which may include restrictions on stablecoin rewards.

China’s Interest Model Sparks Concerns Over U.S. Competitive Edge

According to Brian Armstrong, China’s move to pay interest on its state-backed digital currency is a strategic decision aimed at empowering citizens and gaining an advantage in the growing digital payments economy.

Faryar Shirzad, Chief Policy Officer at Coinbase, echoed this concern, warning that the U.S. risks falling behind.

As Coincentral outlined, stablecoins are increasingly viewed as a tool for real-world payments and programmable finance, especially with global competition rising.

Industry Pushback on Claims That Rewards Harm Bank Deposits

Bcking Brian Armstrong, Shirzad argued that the real concern among large banks is not financial stability but competition. He said banks oppose rewards because they threaten high-margin businesses, such as deposits and card fees. He pointed out that U.S. banks earn more than $360 billion per year from those services.

Shirzad cited recent research from Charles River Associates and Cornell University, both of which found no evidence that stablecoin rewards reduce community bank deposits or lending capacity. CRA’s data, as CNF reported, showed no link between USDC adoption and deposit outflows from smaller banks.

The Cornell study concluded that stablecoin rewards would need to approach 6% to meaningfully affect deposit levels. No such offers currently exist in the market.

Policymakers Urged to Uphold GENIUS Framework for Stablecoin Rewards

Shirzad also referred to the GENIUS legislation previously passed by Congress, which had resolved the issue of rewards by allowing them within certain guidelines. Reopening the debate now, he said, could lead to confusion and harm U.S. innovation.

As CoinCentral detailed, stablecoin reward programs are often framed as consumer benefits and are being tested globally, with growing demand for programmable finance. Armstrong and Shirzad both called for regulatory clarity that allows fair competition while safeguarding innovation.

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