Coinbase CEO Calls for Open “On-Chain Interest”: Stablecoin Legislation Should Allow Everyone to Share in Interest Benefits
Coinbase CEO Brian Armstrong Calls for U.S. Stablecoin Legislation Allowing Onchain Interest
Coinbase CEO Brian Armstrong posted on social media platform X yesterday, urging that U.S. stablecoin legislation should allow users to earn onchain interest. He argued that this move would achieve financial fairness, benefiting both consumers and the economy, while solidifying the U.S. dollar’s dominant position in the global financial system.
https://t.co/Y7JDtkRK1R — Brian Armstrong (@brian_armstrong) March 31, 2025
What is Onchain Interest? The Potential of Stablecoins Remains Unleashed
Armstrong pointed out that while stablecoins like USDC have successfully digitized the U.S. dollar, their potential remains suppressed. Currently, stablecoin issuers invest reserve assets in low-risk instruments like short-term government bonds, with the interest generated solely benefiting the issuers. Therefore, he proposed the concept of “onchain interest,” similar to a digital checking account that can earn interest, aiming to allow coin holders to profit directly and challenge the monopolistic model of traditional financial intermediaries.
Onchain Finance Benefits Billions Globally, Helping Them Escape Financial Marginality
He noted that the average federal funds rate was 4.75% in 2024, while traditional bank savings accounts offered only 0.41%, with some even as low as 0.01%. Against a backdrop of approximately 3% inflation, consumers’ real assets are shrinking. If stablecoins could offer market-level returns of over 4%, it would provide the American public with a genuinely fair avenue for asset appreciation, particularly crucial for low-income populations, helping to narrow the wealth gap.
(Maintaining high interest rates may be a reasonable choice! Federal Reserve’s Collins: Trump’s tariff policies inevitably raised inflation)
Armstrong emphasized that the potential of onchain interest is not limited to the United States. For residents in areas without bank accounts or where local currencies are unstable, stablecoins provide stable, immediate, and low-cost financial services. With just a mobile phone and internet connection, individuals can access dollar-denominated assets and returns, achieving global financial equality.
The Crypto Dividend of the U.S. Economy: Seizing Opportunities in Dollar Hegemony
Stablecoins have become one of the primary holders of U.S. government debt, even surpassing many countries. Armstrong predicted that if the U.S. could take the lead in legislating onchain interest, it would attract global capital towards dollar stablecoins, solidifying their global position. This would further stimulate consumption, savings, and investment, becoming a powerful engine for economic growth. If the U.S. does not act, it will miss out on trillions of dollars in funding and billions of potential users.
Given that stablecoins currently do not enjoy the securities law exemptions of traditional savings accounts, issuers cannot legally pay interest to coin holders. Armstrong also called for creating a fair competitive environment in Congress while promoting stablecoin legislation, allowing both banks and crypto companies to pay interest to consumers.
Interest Earnings: A Coexistence of Support and Opposition
That said, opinions in the U.S. market regarding yield-bearing or interest-bearing stablecoin products remain divided. JPMorgan pointed out that in today’s high-interest-rate environment, yield-bearing stablecoins attract investors similarly to traditional money market funds, and it is optimistic that the share of yield-bearing stablecoins in the stablecoin market could rise from the current 6% to 50% in the future.
(JPMorgan optimistic about yield-bearing stablecoins, expected to absorb idle funds in traditional stablecoins)
On the other hand, U.S. Democratic Senator Kirsten Gillibrand believes that yield-bearing products offered by stablecoin issuers may pose a threat to traditional banking, affecting their ability to provide mortgage loans and small business loans, calling for strict regulation.
(U.S. Senator: Yield-bearing stablecoins could severely impact traditional banks and mortgage systems, calling for stringent regulation)
At the Crossroads of Innovation and Conservatism: Is It Time for Change?
Finally, Armstrong emphasized that the U.S. is facing a crucial choice: “Should we continue to uphold an old financial system that offers only 0.01% interest, or embrace onchain interest that incentivizes innovation and unleashes market potential?” He believes that a truly open market and competition will bring higher-quality financial services, benefiting both consumers and the economy, while keeping the U.S. at the forefront of the global crypto finance arena.
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