Coinbase CEO Calls For Onchain Interest For Investors: “Unleashing onchain interest is a win-win!”

Coinbase CEO Brian Armstrong has made a strong call for legislative changes in the United States, advocating for stablecoin holders to earn “onchain interest” on their digital asset holdings. In a recent post on X (formerly Twitter), Armstrong emphasized that allowing issuers to direct share stablecoin interests with consumers could unlock a host of economic benefits for both investors and the U.S. economy as a whole. 

Brian Armstrong’s Case for Onchain Interest

Armstrong’s proposal centers on the thesis that stablecoins, which are digital currencies pegged to traditional currencies like the U.S. Dollar, should function similarly to traditional bank accounts. Currently, stablecoin issuers retain the interest generated from reserve assets that back these coins, such as U.S. Treasury securities. Armstrong has argued that this model is outdated and inequitable, as it denies investors the chance to benefit from the gains generated by their holdings.

https://t.co/Y7JDtkRK1R

— Brian Armstrong (@brian_armstrong) March 31, 2025

Armstrong explained in his post that, “Onchain interest is the ability of a stablecoin to function as a form of payment and directly deliver interest earned on reserve assets to the stablecoin holders, effectively an interest-bearing checking account”.  He noted that by enabling stablecoin interest, stablecoin could further democratize access to financial tools globally.

Legislative Landscape: A Difficult Terrain for Stablecoins

As of now, federal regulations such as the STABLE Act and GENIUS Act restrict stablecoin providers from offering interest payments. Armstrong has criticized these provisions, arguing that they also strangle innovation and consumer benefits. He remarked, “Consumers deserve a bigger piece of the pie. Opening the door for onchain interest will force us all to up our game for the ultimate benefit of the consumers.”

Armstrong sees the coming times as vital, given the increasing pro-crypto sentiment in the United States’ Congress. He has urged lawmakers to make revisions to these regulations, stating that legal clarity would level the playing field between banks and crypto firms. “This is not just about crypto; it is about ensuring that America remains at the forefront of financial innovation,” he further added. 

The Economic Potential of Stablecoins and Onchain Interest

The Coinbase CEO estimates that allowing on-chain interest could yield returns of around 4% for consumers, far higher than traditional savings accounts, which average around 0.41%. He believes this would incentivize more investors to hold stablecoins, boosting economic activity and enhancing the U.S. dollar’s position in the global market. He also issued a warning that capital might flow to jurisdictions with more favourable regulations if the U.S. fails to act. “We have seen other countries embrace crypto innovation while we debate outdated rules. It’s time for change,” he stated in his post. 

The Wider Implications of Armstrong’s Suggestions

Armstrong’s case for stablecoins aligns with his firm belief in cryptocurrency’s transformative power. His early vision of using crypto as a mainstream form of payments has now evolved into a broader mission to integrate digital assets into traditional finance. He highlighted the role of stablecoins in simplifying crypto adoption: “Stablecoins can act as a bridge between conventional finance and crypto, making digital payments more convenient”. He also sees innovations like human-readable names and improved transaction processing that will further enhance access to crypto. 

Armstrong’s Call for Action and the Current State of Stablecoins

Stablecoins have already established themselves as a crucial component of the cryptocurrency ecosystem. They facilitate faster transactions, cross-border payments, and also act as a hedge against the trademarked volatility of crypto markets. Their rising transaction volumes and use cases highlight their growing adoption. However, under current regulations, stablecoin holders do not enjoy any direct benefits from the interest generated by reserve assets, limiting their overall potential.Armstrong’s proposal to enable stablecoin interest could unlock a new phase of stablecoin usage. By allowing stablecoin holders to earn yield that are comparable to those generated by U.S. Treasury securities, stablecoins could soon become a more attractive financial avenue for everyday investors.