Coinbase executives warned that changes to the U.S. stablecoin framework could weaken Washington’s position in the global race for digital payments, just as China moves to make its central bank digital currencies (CBDCs) more competitive.
Faryar Shirzad, chief policy officer at Coinbase, said in a post on He pointed to recent announcements by China’s central bank as evidence that rival financial systems are moving quickly to make state-backed digital money more attractive.
China’s central bank, the People’s Bank of China, this week announced the outline of a framework that will allow commercial banks to pay interest on balances held in digital renminbi wallets from January 1, 2026. Lu Lei, deputy governor of the People’s Bank of China, said the changes will allow the electronic yuan to go beyond its original role as a digital cash substitute and be integrated into banks’ asset and liability management.
“The digital yuan will move from the era of digital cash to the era of digital deposit money,” Lei said in the report. “It has the functions of monetary value measurement, value storage, and cross-border payments.”
Stablecoin reward debate raises competition concerns
The GENIUS Act, passed in June, established reserve and compliance rules for stablecoins while prohibiting issuers from paying interest directly. However, the law allows platforms and third parties to offer rewards associated with the use of stablecoins.
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“If this issue is mishandled in the Senate negotiations on the market structure bill, it could give global rivals a major boost that gives non-US stablecoins and CBDCs a significant competitive advantage at the worst possible time,” Shirzad warned.
The warning comes as industry insiders express concern that bank lobbyists are trying to reinstate the GENIUS Act. “Now the banking lobbies want to reopen,” crypto policy commentator Max Avery said in a post last week.
Avery noted that banks currently earn about 4% on reserves held at the Federal Reserve, while consumers often earn close to zero on traditional savings accounts. He said stablecoin platforms are threatening that model by offering to share a portion of their profits with users.
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Coinbase CEO calls GENIUS Act a ‘red line that should never be crossed’
Last week, Coinbase CEO Brian Armstrong said any attempt to reinstate the GENIUS Act would cross a “red line” and accused banks of lobbying Congress to limit stablecoin rewards to protect their deposit base. He said Coinbase will continue to oppose efforts to change the law, adding that he was surprised that such lobbying efforts were occurring so openly.
Armstrong also argues that banks have misjudged the issue, and predicts that they will eventually push to offer interest and yield on stablecoins themselves once the opportunity becomes clear. He described the current lobbying effort as “unethical” and said it would ultimately fail.
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