Coinbase CEO Brian Armstrong has suggested legal changes to allow stablecoin holders to earn interest on their assets.
Towards Legislative Changes
According to Armstrong, the current structure for stablecoins like USDT and USDC allows all interest from reserve assets to go to issuers. Armstrong suggests changing the law to allow the distribution of interest to holders. Technology already exists to enable this, but legal restrictions prevent it. Passing such legislation is logical, given ongoing work on stablecoin laws and the positive stance of the US administration.
Consumer Benefits
Armstrong notes that enabling interest on stablecoins will be a landmark achievement for US and global consumers. Currently, savings account yield significantly lags behind Federal Reserve rates, leading to financial losses for users. Implementing on-chain interest allows consumers to earn higher returns and equitably distribute benefits across all demographics.
Opinions and Discussions
The proposal has garnered mostly positive feedback. However, some critics, like crypto entrepreneur Artem Tolkachev, argue that interest isn't default in banks, unlike in crypto. He highlighted DeFi platforms where users can earn yields, which he believes is a more appropriate solution. Introducing fixed interest on stablecoins could centralize the system and damage the crypto ecosystem.
Armstrong's proposal could lead to significant changes in the crypto industry, opening up new opportunities for consumers and strengthening the US economy.
