Coinbase CEO Brian Armstrong is advocating for stablecoin legislation that would allow consumers to earn interest directly from their digital dollar holdings. In a recent post on March 31, Armstrong highlighted the importance of onchain interest, which would enable holders of fiat-backed stablecoins to receive a portion of the yield generated by the reserve assets backing the stablecoin.
Currently, banks offer interest-bearing accounts, but stablecoin issuers face legal uncertainty that prevents them from sharing interest with users without potentially violating securities laws. Armstrong believes that consumers deserve a larger share of the profits and that onchain interest would benefit everyone involved.
Stablecoins have become popular as a digital representation of fiat currencies, but Armstrong argues that they have yet to reach their full potential for everyday users. With interest rates on traditional savings accounts remaining low, many consumers are losing out on potential earnings. By allowing onchain interest, Armstrong believes that regular people will have a fair opportunity to grow and maintain their wealth.
Moreover, stablecoins could have a significant impact on global financial access by providing a stable and accessible financial system to billions of underbanked individuals. By enabling interest-bearing stablecoins, the US could help onboard a new wave of users into the financial system, regardless of their location or financial background.
From an economic standpoint, Armstrong sees onchain interest for stablecoins as a strategic advantage for the US. By attracting more global demand to dollar-denominated assets, stablecoin issuers are contributing to the dominance of the US dollar. If consumers worldwide could earn interest on US stablecoins, it would drive economic growth through increased consumer spending and investment.
However, regulatory inaction could hinder the potential benefits of onchain interest for stablecoins. Armstrong urges Congress to act swiftly and ensure that new legislation provides clear legal provisions for regulated issuers to offer onchain interest without facing complex regulatory hurdles.
In conclusion, Armstrong emphasizes the importance of modernizing the financial system to benefit consumers and promote economic growth. By allowing onchain interest for stablecoins, the US can maintain its position as a leader in global finance and provide equal financial access to individuals around the world.