Coinbase executive Faryar Shirzad warned Congress that banking sector efforts to ban stablecoin interest payments could weaken US dollar dominance as China prepares to offer yields on its Digital Yuan starting Jan. 1. The Coinbase Chief Policy Officer said the move threatens competitive advantages established under the GENIUS Act signed into law in July.
What Happened: China's Digital Currency
The People's Bank of China announced plans to pay interest on Digital Yuan holdings beginning Jan. 1, 2026, according to Deputy Governor Lu Lei.
Commercial banks managing e-CNY wallets will compensate clients based on balances under a framework giving the digital currency the same legal status as traditional deposits.
Shirzad stated in an X post that "tokenization is the future and the GENIUS Act was a visionary move by POTUS and Congress to ensure US dollar stablecoins issued under US rules would be the primary settlement instrument of the future."
He cautioned that mishandling interest payment provisions during Senate negotiations "could hand our global rivals a big assist in giving non-US stablecoins and CBDCs a critical competitive advantage at the worst possible time."
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Why It Matters: National Security
Brian Armstrong, Coinbase's Chief Executive Officer, emphasized that US stablecoins must remain competitive globally.
Jake Chervinsky, Chief Legal Officer at Variant, called the banking sector's push "a matter of national security," arguing that restricting stablecoin rewards would "hand that win to China."
Banking associations sent a joint letter to the Senate Banking Committee earlier this year requesting amendments to the GENIUS Act.
The groups argued interest payments would distort market dynamics and affect credit creation, proposing extended prohibitions covering digital asset exchanges, brokers and dealers. The legislation currently bars issuers from paying interest on payment-purpose stablecoins but does not explicitly address third-party platforms offering such rewards.
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