Coinbase CEO Brian Armstrong Calls for Stablecoin Legislation to Enable On-Chain Interest

In a passionate plea for innovation in the cryptocurrency space, Coinbase CEO Brian Armstrong has called on lawmakers to support stablecoin legislation that would allow

Coinbase CEO Brian Armstrong penned an impassioned plea for lawmakers to support stablecoin legislation that would allow consumers to earn interest directly from their digital dollar holdings.

In a recent blog post titled "Stablecoins: The Next Chapter," Armstrong highlighted the "win-win" scenario of such legislation for both consumers and the broader U.S. economy. He proposed that the next phase of stablecoin development should include a mechanism for onchain interest, enabling holders of fiat-backed stablecoins to receive a share of the yield generated by underlying assets like short-term U.S. Treasuries.

"We can either modernize the system to benefit consumers — or protect an outdated one that enriches middlemen. Let’s get this done!" Armstrong wrote.

Stablecoins and the Future of Financial Innovation

According to Armstrong, stablecoins have already achieved significant adoption as digital representations of fiat currencies, but their full potential remains untapped. He pointed out that banks have long been able to offer interest-bearing accounts in accordance with established regulatory exemptions, permitting them to collect interest from underlying assets like short-term U.S. Treasuries and pass a portion of it to customers.

However, despite the large-scale buying of U.S. Treasury bills by stablecoin issuers—which has contributed to an urgent need for dollar liquidity in the global economy—stablecoin issuers face significant legal uncertainty in sharing interest with users without potentially running afoul of securities laws.

This regulatory challenge, according to Armstrong, presents an opportunity to innovate further in the space.

“Consumers deserve a bigger piece of the pie. As we open the door for onchain interest, it will force us all to up our game for the ultimate benefit of consumers, and will keep this innovation onshore.”

A Fairer Financial Future for All

One of Armstrong’s key points is that onchain interest could democratize access to market-rate yields, which would allow average consumers to earn a fairer return on their savings compared to traditional banking systems. He noted the disparity between the Federal Funds rate, which in 2024 was 4.75%, and the near-zero interest rates most consumers earn on their savings accounts—as low as 0.01%.

With inflation still lingering around 3%, Armstrong highlighted how this interest gap translates into a slow loss of purchasing power for everyday Americans. In contrast, onchain interest could help regular people maintain and grow their wealth by offering them better financial returns on their fiat-backed digital dollar holdings.

“Onchain interest democratizes access to market-rate yields, giving regular people a fair shot at maintaining and growing their wealth.”

Global Implications: Financial Inclusion and Global Access

Beyond the U.S., Armstrong also touched upon the transformative impact stablecoins could have in underbanked regions across the globe. Billions of people in countries with unstable currencies are either excluded from accessing the U.S. dollar or are forced to use an unservable local currency.

Stablecoins, however, offer a lifeline: a stable, dollar-backed asset that can be accessed with just an internet connection. According to Armstrong, by allowing interest-bearing stablecoins, the U.S. could onboard a new wave of global users into an instant, transparent, and accessible financial system.

This system, he noted, would eliminate the need for branch visits, excessive overdraft fees, and expensive remittance services, ultimately forging an open and equal financial future for all.

Strategic Advantage for the U.S. Economy

In his post, Armstrong highlighted that legislation enabling onchain interest would provide multiple benefits for the U.S. economy. He noted how stablecoin issuers are already among the largest buyers of U.S. Treasuries, surpassing many foreign governments in their contributions to this market. This factor has been instrumental in driving up the demand for dollar-denominated assets throughout the global economy.

With more consumers able to earn interest on stablecoins, Armstrong believes it would result in even greater Treasury demand, reinforcing dollar dominance on the world stage and stimulating economic activity through higher consumer spending and investment.

“More yield in consumers’ hands means more spending, saving, investing — fueling economic growth in all local economies where stablecoins are held.”

However, Armstrong cautioned that without swift action from Congress, the U.S. risks missing out on trillions of dollars in potential global financial flows and seeing this innovation take place in other countries. He noted that the pro-crypto administration and active Congressional involvement in stablecoin regulation create a unique opportunity to modernize the U.S. financial system for consumers.

Urgent Call for Regulatory Action

Armstrong is urging Congress to take action and ensure that new stablecoin legislation provides clear legal frameworks that would allow regulated issuers to offer onchain interest without triggering complex disclosure requirements or securities classifications.

He concluded by saying, “We can either modernize the system to benefit consumers — or protect an outdated one that enriches middlemen. Let’s get this done!”

As stablecoins continue to gain