Coinbase COIN CEO Brian Armstrong is making a strong case for unlocking onchain interest for stablecoins

In a blog post published Tuesday, Armstrong laid out a concise argument in favor of allowing interest to flow directly to stablecoin holders

Coinbase (NASDAQ:COIN) CEO Brian Armstrong is making a strong case for unlocking onchain interest for stablecoins, arguing that it offers a practical path to empowering consumers, expanding global financial access and reinforcing U.S. dollar dominance in the digital era.

What Happened: In a blog post published Tuesday, Armstrong put forth a concise argument in favor of allowing interest to flow directly to stablecoin holders, similar to traditional savings accounts.

“Consumers deserve a bigger piece of the pie,” he wrote. “Opening the door for onchain interest will force us all to up our game for the ultimate benefit of consumers.”

Currently, stablecoin issuers like Circle—whose USDC/USD token is backed 1:1 by U.S. dollars—invest reserves in low-risk assets such as short-term Treasuries. The interest earned is typically kept by the issuer.

Armstrong is pushing for a regulatory change that would permit stablecoin holders to receive this yield directly, bypassing intermediaries and mirroring the structure of interest-bearing bank accounts.

The stakes are high for consumers, Armstrong argued. While the average federal funds rate hovered around 4.75% in 2024, the typical consumer savings account paid just 0.41%—or as low as 0.01% in many cases.

With inflation at roughly 3%, savers were losing purchasing power in real terms.

“Onchain interest democratizes access to the market rate yield,” Armstrong wrote. “It gives regular people a fair shot at maintaining and growing their wealth.”

Beyond U.S. borders, the implications are even more expansive. Armstrong noted that billions of people globally remain underbanked or lack access to stable fiat currencies.

Onchain interest via USD-backed stablecoins could provide these users with interest-earning digital dollars, accessible from any internet-connected device—without branch visits, remittance fees, or hyperinflation risks.

Armstrong also highlighted the macro benefits for the U.S. economy. Stablecoin issuers are already among the largest buyers of U.S. Treasuries.

By enabling interest to be distributed to stablecoin users, he believes it would drive further global demand for dollar-backed assets, strengthening the dollar’s role in the digital age.

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

However, current securities laws limit this potential. Unlike banks, stablecoin issuers face strict disclosure and compliance burdens if they attempt to pay interest to users—barriers Armstrong says are outdated.

“The tech is all there, but the law hasn't caught up,” he explained.

What’s Next: With Congress now actively debating stablecoin legislation, Armstrong called on lawmakers to create a level playing field that allows regulated stablecoin issuers to share interest with users—without classifying those stablecoins as securities.

"We can choose to level the playing field and ensure these laws pave a way, or we can protect an outdated system that pays the average person 0.01%."