Coinbase has raised concerns that restrictions on yielding interest on US dollar-backed stablecoins could undermine America’s position in global digital finance, especially as China prepares to introduce interest payments on its digital yuan (e-CNY).
In a recent statement on X, Faryar Shirzad emphasized that tokenization is the future of money and praised the GENIUS Act as a forward-thinking framework to position US dollar stablecoins as the dominant global settlement tool.
However, he cautioned that overly restrictive implementation—particularly around rewards—could inadvertently benefit foreign competitors. The law requires stablecoins to be backed 1:1 with high-quality liquid assets (e.g., cash or Treasury bills) and mandates monthly reserve reporting, applying to major issuers like Tether (USDT) and Circle (USDC), which dominate a $217 billion market.
China’s People’s Bank of China (PBOC) announced a major upgrade to its digital yuan framework, effective January 1, 2026. Commercial banks will be allowed to pay interest on verified e-CNY wallet balances, shifting it from a pure digital cash equivalent to a “digital deposit currency.”
This includes deposit insurance coverage and alignment with existing deposit pricing rules. Despite years of pilots, e-CNY adoption has lagged, but interest payments aim to boost appeal as a store of value, competing with private platforms like Alipay and WeChat Pay.
The move coincides with expanded cross-border pilots and infrastructure enhancements, positioning e-CNY for broader international use.
The GENIUS Act explicitly bans direct interest or yield on payment stablecoins to keep them focused on transactions rather than investments, protecting traditional banking models.
Crypto industry advocates, including the Blockchain Association, argue that strict enforcement lacks evidence of risks to community banks and could reduce US stablecoins’ global competitiveness. Banking groups, like the American Bankers Association, support the ban to safeguard deposit bases.
As negotiations continue on broader digital asset rules, the timing of China’s interest-bearing CBDC has intensified calls for balanced US policy to maintain dollar dominance in the tokenized economy.
