The CEO of Coinbase, Brian Armstrong, is promoting the idea of U.S. regulations that would allow consumers to earn interest on stablecoins.
In a recent post on X, Armstrong emphasized that granting interest on stablecoins would be advantageous for consumers, enhance financial inclusion worldwide, and bolster the U.S. economy.
He pointed out that stablecoins are usually backed at a 1:1 ratio with the dollar, and are invested in low-risk assets like U.S. Treasuries. Typically, the interest generated from these reserves is kept by the issuers instead of being passed on to consumers.
Onchain interest as a ‘win’ for U.S. consumers
Armstrong proposed that “onchain interest” could act similarly to an interest-bearing checking account, allowing users to gain access to yields that are competitive with the Federal Reserve’s benchmark rate.
“U.S. consumers win,” he declared. “They would be the biggest beneficiaries of onchain interest, as they are suffering the most in its absence.”
He noted that U.S. consumers are currently seeing very low interest rates on savings accounts despite prevailing high market rates, resulting in a genuine decrease in purchasing power.
Armstrong also highlighted that billions of people around the world remain unbanked and could gain from the opportunity to earn interest on U.S. dollars through stablecoins.
Furthermore, he remarked that stablecoins are significant holders of U.S. Treasuries, which helps to uphold dollar dominance.
He pointed out that regulatory obstacles are hindering stablecoins from offering interest in the same manner that banks do. He urged legislators to tackle this in forthcoming stablecoin regulations, asserting that a free-market approach would favor consumers and foster innovation within the U.S.
“So why aren’t we doing this today?” Armstrong asked. “The technology is all in place, but the legislation hasn’t kept pace.”