US Stablecoin Regulation and Global Competition: Industry Leaders Warn of Potential Setbacks
A senior executive at Coinbase has issued a stark warning regarding upcoming changes to the US stablecoin regulatory framework, suggesting that these modifications could diminish America's leadership in the international digital payments arena. As China advances its central bank digital currency (CBDC) initiatives, tensions are mounting over the competitive landscape of digital finance.
Faryar Shirzad, Coinbase’s chief policy officer, expressed concern via X about the implications of the GENIUS Act, which governs stablecoin issuance in the US. Specifically, he highlighted that restrictions preventing stablecoin platforms from offering rewards—linked to the law’s provisions—could hamper the global competitiveness of US dollar-pegged digital assets. Shirzad pointed out that China’s recent announcement indicating the introduction of interest payments on digital yuan wallets from January 2026 signals a swift move to extend the functionality of its CBDC beyond mere digital cash, integrating it deeply into banks' asset management and cross-border payment systems.
Amplifying Competition Concerns: The Stablecoin Rewards Debate
The GENIUS Act, passed in June, sets reserve and compliance standards for stablecoins but explicitly prohibits issuers from paying direct interest. However, it permits third-party reward programs that incentivize stablecoin use. Industry insiders warn that these restrictions could inadvertently bolster foreign competitors by making non-US stablecoins and CBDCs more attractive in the market.
Commentators like Max Avery, a crypto policy analyst, have voiced fears that lobbying efforts aim to reopen the law, which could fortify rival nations’ strategic position in digital currency adoption. Avery noted that while US banks currently earn approximately 4% on reserves held at the Federal Reserve, consumers see minimal returns on savings accounts. Stablecoin platforms, offering yield-sharing opportunities, threaten to disrupt that traditional banking model.
Coinbase’s CEO Stakes a “Red Line” Against Revisions
Coinbase CEO Brian Armstrong emphasized his opposition to efforts aimed at reopening the GENIUS Act, describing such moves as a “red line.” He accused banks of lobbying aggressively to limit stablecoin rewards, ostensibly to protect their deposit bases, and warned that the industry must resist these efforts. Armstrong also conveyed skepticism about the banks’ long-term intentions, suggesting they will eventually seek to offer interest on stablecoins once regulatory conditions are more favorable.
Despite these warnings, industry observers see the ongoing lobbying as an unorthodox approach, risking to undermine US leadership in the evolving digital payments landscape amidst rising global competition.
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