Coinbase CEO Armstrong Urges Lawmakers to Allow On-Chain Interest for Stablecoin Holders

Highlights:

• Armstrong urges lawmakers to create stablecoin laws that enable consumers to earn interest on their holdings.
• On-chain interest could provide consumers with higher yields than traditional savings accounts.
• Armstrong believes interest-bearing stablecoins can create global financial inclusion with just an internet connection.

Coinbase CEO Brian Armstrong has called on U.S. lawmakers to support stablecoin regulations that let consumers earn interest on their dollar-pegged stablecoins, such as USDT and USDC. He describes this initiative as a “win-win” for consumers, global financial inclusion, and the long-term strength of the U.S. economy.​

In a comprehensive post on March 31, Armstrong emphasized that the future of stablecoin innovation should incorporate “on-chain interest.” This would enable holders of fiat-backed stablecoins to earn a portion of the returns from the reserve assets backing them. These assets could include short-term U.S. Treasuries.

https://t.co/Y7JDtkRK1R

— Brian Armstrong (@brian_armstrong) March 31, 2025

Due to long-standing regulatory exemptions, banks can provide interest-bearing accounts. However, stablecoin issuers face legal uncertainty, which prevents them from sharing interest with users without possibly violating securities laws.

He explained:

“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 holder, effectively an interest-bearing checking account.”

Coinbase’s CEO said the U.S. has a chance to “level the playing field” with stablecoin legislation. He believes the laws should let all regulated stablecoins pay interest directly to consumers, like savings accounts do. Armstrong also stated that stablecoins have already succeeded in digitizing currencies. Adding on-chain interest would allow “the average person and the US economy” to benefit more. 

Stablecoin On-Chain Interest Can Boost Economic Growth and Yields

Armstrong explained this by comparing the interest rates of savings accounts and Federal Reserve funds. The average yield for Fed funds is 4.75%. In contrast, savings accounts typically offer around 0.41%, with many paying as low as 0.01%. He highlighted that this low yield puts savings account users at a disadvantage, especially with inflation around 3%. Armstrong believes that allowing on-chain interest for stablecoins would provide more people with access to a 4% yield.

Armstrong argued that offering higher yields than traditional savings accounts would put more money in consumers’ hands. This could boost spending, saving, and investing, driving growth in local economies where stablecoins are used. He cautioned that without enabling on-chain interest, the U.S. could lose billions of users and trillions in potential cash flows.

Armstrong stated that allowing interest-bearing stablecoins could help the U.S. onboard a new wave of global users. This would create an instant, transparent, and accessible financial system that only requires an internet connection.

He wrote: 

“No branch visits, no excessive overdraft or remittance fees. It’s equal financial access for everyone, powered by crypto rails.”

Currently, neither the STABLE Act nor the GENIUS Act allows for on-chain interest-generating stablecoins. The current version of the STABLE Act contains a clause that prevents “payment stablecoin” issuers from offering yields to holders.