Coinbase CEO Brian Armstrong Calls for Legislative Updates to Allow Stablecoin Holders to Earn On-Chain Interest

Coinbase CEO Brian Armstrong has strongly called for legislative updates allowing stablecoin holders to earn “on-chain interest.” In a March 31 post on X, Armstrong said existing laws unfairly restrict stablecoin

Coinbase CEO Brian Armstrong is urging Congress to update legislation to allow stablecoin holders to earn "on-chain interest," tying this change to broader financial inclusion and U.S. economic competitiveness.

In a March 31 post on X, formerly Twitter, Armstrong highlighted that existing laws unfairly restrict stablecoin providers from passing earnings to users. He noted that these digital currencies are typically backed 1:1 by the U.S. dollar in low-risk American Treasuries.

"The returns that Treasuries generate should be shared with the people holding the stablecoins," Armstrong stated.

A Free Market Approach to Stablecoin Interest

Coinbase CEO has consistently supported a free market philosophy regarding financial rules. He believes banks and crypto firms should operate under the same laws. He has criticized what he sees as government favoritism toward traditional banking institutions, asserting such policies limit innovation and consumer choice.

"The STABLE Act explicitly prohibits stablecoin issuers from offering yield, while the GENIUS Act was amended to exclude such instruments from its definition of a 'payment stablecoin,'" explained Armstrong.

This interest-bearing feature is a fundamental component of stablecoin policy in the minds of Coinbase CEO. He pointed out that tying stablecoins to U.S. Treasuries would generate interest that could be distributed to stablecoin holders.

"This would be a tangible benefit for the American people, especially in today’s economic climate, where interest rates on savings accounts are at record lows," said Armstrong.

According to Coinbase CEO, the average interest rate on interest-bearing checking and savings accounts at the largest U.S. banks is currently 0.41%. In contrast, onchain interest rates could vary but are likely to be significantly higher.

"The lower interest rates and stifling regulations are part of the broader competitive landscape where the U.S. financial system is at a disadvantage compared to other global financial systems," asserted Armstrong.

The Economic and Competitive Benefits of Onchain Interest

Integrating onchain interest into stablecoin regulation would also bring broader economic advantages, according to Armstrong. He argued that allowing stablecoin interest strengthens the American economy by increasing the use of dollar-backed stablecoins worldwide. This could increase demand for U.S. Treasuries, furthering dollar dominance in the digital financial system.

"Billions in financial flows and innovation would be unlocked if Congress acts to permit onchain interest in stablecoins in this session," said Armstrong. "But without it, the U.S. risks falling behind and we may see this technology flourish in other jurisdictions."

suggest that lawmakers include onchain interest in any pending legislation regulating stablecoins, such as the STABLE Act or the GENIUS Act. This change would be a fundamental addition to the emerging regulatory landscape for stablecoins.

As discussions about stablecoin regulation continue, Armstrong's advocacy underscores the tensions between innovation and regulation within the crypto space. His suggestions, if implemented by Congress, could open the door for stablecoin holders to earn meaningful yields on their digital dollar instruments. However, if Congress maintains restrictive policies, it could push the crypto industry to seek out jurisdictions more receptive to innovation.