Coinbase CEO Brian Armstrong wants U.S. laws to change so that stablecoin holders can earn interest

He believes that stablecoins should work like bank accounts, where interest from reserve assets is given directly to users.

Coinbase CEO Brian Armstrong wants U.S. laws to change so that stablecoin holders can earn interest. He believes that stablecoins should work like bank accounts, where interest from reserve assets is given directly to users. Right now, stablecoin issuers obtain interest from U.S. Treasury investments they maintain the funds solely for their benefit. According to Armstrong, the situation is ethically unjust since users should get financial benefits from their stablecoin holdings.

Stablecoin Holders Could Earn Interest Under Proposed Regulation

He explained his views on X, saying stablecoins have already become popular by digitizing the U.S. dollar. However, stablecoins do not allow their users to earn interest as their major limitation. Every USDC stablecoin unit contains a dollar value that stablecoin issuers keep in specific safe investments such as U.S. Treasury bonds. When the law permits it, users will get an opportunity to earn interest from their stablecoin holdings, similarly to how savings accounts function.

Armstrong suggests that introducing interest on digital currency would benefit multiple users. Financial institution savings accounts in the United States provide minimal interest rates ranging between 0.01% and 0.01%. U.S. Treasury bonds provide investors with returns exceeding 4% at present.

Meanwhile, low-interest savings accounts become less effective through inflation since money suffers decreased purchasing power over time. Users can earn more substantial interest rates by holding stablecoins, which allows them to develop their savings more rapidly.

The adoption of this system would provide financial advantages to citizens residing in developing nations. People across numerous nations lack both bank institutions and dependable financial tender. According to Armstrong, stablecoins would provide users with safe money storage together with interest-earning capabilities, which do not require bank access. Financial services normally inaccessible would be available through any internet connection, allowing people to seek these services.

Stablecoins Could Revolutionize Banking with Interest

The modifications proposed for the economy would benefit the U.S. economy as a whole. The existing U.S. Treasury bond holdings managed by stablecoin issuers exceed those of certain national governments. An interest-bearing stablecoin system would drive worldwide dollar demand up because users would prefer this solution over other payment methods. The additional funds held by people would drive both consumption and savings, and investment activities toward economic expansion.

However, the existing laws prevent such transactions from taking place. Security regulations prevent stablecoin issuers from giving any interest benefits to their customers because of the existing laws. According to Armstrong, the existing rules regarding stablecoins need an update because they restrict their operation like regular savings accounts do.

President Donald Trump asked Congress to establish stablecoin regulations during his recent remarks. He stated in March that stablecoins have the potential to strengthen the global position of the U.S. dollar. The banking system faces criticism from him regarding its challenging policies that affect both cryptocurrency operations and their respective customers. The moment is ideal, according to Armstrong, for the government to step forward.

Stablecoins have the potential to offer financial benefits currently provided by bank accounts once new laws are approved by the government. No intermediaries would claim interest payments because users could receive them personally. The financial system would get better for everyone in Armstrong’s vision as stablecoins would emerge as true alternatives to traditional banking services.