Coinbase CEO Brian Armstrong is pointing to China as a model for US stablecoin policy. The timing raises questions about his motives.
Armstrong’s defense of China’s central bank digital currency interest payments comes as his company fights to preserve a key revenue stream under threat from the US banking lobby. The GENIUS Act, passed last July, allows platforms like Coinbase to share yields with stablecoin holders — a provision that banking groups are now pushing to eliminate.
What Armstrong Said
Armstrong took to X on January 8 to praise China’s approach to its digital currency. “China has decided to pay interest on its own stablecoin, because it benefits ordinary people, and they recognize it as a competitive advantage,” he wrote. “I worry we are missing the forest through the trees in the US.”
He argued that allowing rewards on stablecoins would benefit ordinary Americans without disrupting bank lending, and called for letting “the market do both.”
The Chinese Response
But from China, the reaction was bemusement. Crypto analyst Phyrex pointed out a fundamental error in Armstrong’s framing: the digital yuan is not a stablecoin.
According to Phyrex, the interest payments are not a sign of competitive strength but a response to persistently low adoption. Yuan held in WeChat Pay and Alipay, China’s dominant mobile payment platforms, earns interest, while the digital yuan previously offered none, creating little incentive for users to switch. The interest program that took effect January 1 is subsidized by commercial banks, not the central bank, and rates are likely below standard demand deposit rates.
The GENIUS Act Battle
Armstrong’s comments landed amid an intense lobbying war over US stablecoin regulation.
The GENIUS Act, passed in July 2025, prohibited stablecoin issuers from paying interest directly to holders but allowed third-party platforms, such as exchanges, to share yields through “rewards” programs. This compromise favored platforms like Coinbase.
The banking industry has pushed back hard. In November, the American Bankers Association and 52 state banking associations sent a letter to the Treasury Department urging regulators to close this “loophole.” They argued that stablecoin platforms offering high-yield rewards could trigger deposit outflows, threatening up to $6.6 trillion in lending capacity.
The lobbying continued this week. On January 7, more than 200 community bank leaders sent a letter to the Senate asking lawmakers to extend the GENIUS Act’s interest prohibition to issuers’ affiliates and partners.
Armstrong fired back on December 26, calling any attempt to reopen the GENIUS Act a “red line.” He criticized banks for earning roughly 4% on reserves parked at the Federal Reserve while paying depositors near zero, and accused them of “mental gymnastics” in framing yield restrictions as safety concerns.
The Limits of the China Comparison
Armstrong’s invocation of China appears designed to construct a competitive narrative: if China is doing it, why can’t America?
The comparison invites scrutiny. A CBDC and a private stablecoin are different instruments — the digital yuan is legal tender issued by China’s central bank, while USDC and USDT are dollar-pegged tokens from private companies. Critics like Phyrex argue the digital yuan’s interest program reflects adoption struggles, not competitive strength.
But Armstrong’s broader point — that yield-sharing benefits ordinary people and shouldn’t be restricted — may resonate regardless of whether his China example holds up. The US debate ultimately centers on a different question: how much room private platforms should have to compete with banks for deposits.
