Billions at Risk? Coinbase CEO Brian Armstrong Sounds Alarm Over Restrictive Stablecoin Regulations

Coinbase CEO Brian Armstrong has strongly called for legislative updates allowing stablecoin holders to earn “on-chain interest.” In a March 31 post on X, Armstrong said existing laws unfairly restrict stablecoin providers from passing earnings to users. He emphasized that these digital currencies are typically backed 1:1 by the U.S. dollar in low-risk American Treasuries. Armstrong believes the returns generated by these holdings should be shared with the individuals holding the stablecoins.

The Coinbase CEO framed his appeal as promoting greater financial inclusion and economic expansion. He highlighted how interest-bearing stablecoins could provide consumers with significantly better yields than typical savings accounts. According to Armstrong, traditional accounts currently provide an average return of just 0.41%. He believes permitting issuers to distribute interest directly would benefit American consumers and the broader economy.

A Free Market Approach to Stablecoin Interest

Armstrong has consistently supported a free market philosophy regarding financial rules. He believes banks and crypto firms should operate under the same laws. He has criticized what he sees as government favoritism toward traditional banking institutions, asserting such policies limit innovation and consumer choice.

He also noted that stablecoins already play a critical role in digitizing the USD and other national currencies. Armstrong said legalizing stablecoin interest would empower individual holders and boost America’s global financial influence. He encouraged lawmakers crafting pending stablecoin legislation, like the STABLE Act or the GENIUS Act, to include on-chain interest. Armstrong considers this feature a fundamental component of stablecoin policy.

The Economic and Competitive Benefits of Onchain Interest

Armstrong outlined the broader economic advantages of integrating onchain interest into stablecoin regulation. He argued that allowing stablecoin interest strengthens the American economy by increasing the use of dollar-backed stablecoins worldwide. This could increase demand for U.S. Treasuries, strengthening dollar dominance in the digital financial system.

https://t.co/Y7JDtkRK1R

— Brian Armstrong (@brian_armstrong) March 31, 2025

Furthermore, Armstrong emphasized that the ability to earn interest increases consumers’ disposable income. He believes this economic activity would create a positive effect by boosting local economies where stablecoin use is widespread. The Coinbase CEO warned that without these changes, the United States risks missing billions in potential financial flows and innovation. He warned that America could also lose its edge in financial innovation.

Challenges in Congress and Regulatory Roadblocks

Legislative progress remains uncertain despite Armstrong’s push for changes benefiting stablecoin holders. Currently, the proposed STABLE Act and the GENIUS Act both impose restrictions on interest-generating stablecoins. The STABLE Act explicitly prohibits stablecoin issuers from offering yield, while the GENIUS Act was revised to exclude such instruments from its definition of a “payment stablecoin.”

Broader financial policy discussions further complicate these regulatory obstacles. Some lawmakers support stricter oversight of stablecoin issuers, placing them under rules like the Bank Secrecy Act. Others, like House Majority Whip Tom Emmer, believe this would put unfair limits on companies. Meanwhile, figures including Senator Elizabeth Warren have connected stablecoin legislation to political and corporate interests, adding another layer of complexity.

The Path Forward for Stablecoin Legislation

As discussions about stablecoin regulation advance, Armstrong’s advocacy highlights the tensions between innovation and regulation within the crypto space. He remains firm in his belief that permitting on-chain interest is not only a step toward financial fairness but also a way to maintain U.S. leadership globally.

The outcome of these legislative debates will have far-reaching consequences. If lawmakers implement Armstrong’s suggestions, stablecoin holders could soon see their digital dollar instruments yield meaningful returns. However, if restrictive policies remain in place, the crypto industry could explore alternative jurisdictions more favorable to innovation.