Coinbase CEO Brian Armstrong recently called for lawmakers to support stablecoin legislation that allows consumers to earn interest directly from their digital dollar holdings, framing it as beneficial for consumers, global financial access, and the overall US economy. In a post published on March 31, Armstrong argued that stablecoin innovation must include “onchain interest,” allowing holders of fiat-backed stablecoins to receive yield from underlying reserve assets. While banks can offer interest-bearing accounts, stablecoin issuers face legal uncertainties preventing them from sharing interest without risking securities laws.
Armstrong highlighted the significant gap between the average Federal Funds rate and the low interest rates that consumers earn on their savings accounts. This, coupled with inflation, results in a real loss of purchasing power for everyday Americans. By allowing onchain interest, Armstrong believes that access to market-rate yields will democratize wealth growth for regular individuals and provide a fair opportunity to maintain and grow their wealth. Additionally, stablecoins could have a global impact by providing instant and accessible financial access to billions of underbanked individuals in regions with volatile local currencies.
The Coinbase CEO also emphasized the strategic advantage onchain interest for stablecoins could bring to the US economy. Stablecoin issuers are already significant buyers of US Treasuries, helping to attract global demand back to dollar-denominated assets. By enabling consumers worldwide to earn interest on US stablecoins, Armstrong believes that adoption would increase, boosting Treasury demand, reinforcing dollar dominance, and stimulating economic growth through increased consumer spending and investment. However, regulatory inaction could cause the US to miss out on trillions of dollars in global financial flows.
Armstrong called on Congress to act quickly and ensure that new stablecoin legislation includes clear provisions allowing regulated issuers to provide onchain interest without complex disclosure requirements or securities classifications. With a pro-crypto administration and Congress working on stablecoin regulation, he sees a unique opportunity to modernize the system for the benefit of consumers, rather than protecting outdated practices that only enrich middlemen. Armstrong’s advocacy for onchain interest in stablecoins aims to create a fairer financial future for individuals, improve global financial access, and provide strategic advantages for the US economy in the evolving digital financial landscape.
