Coinbase CEO Brian Armstrong has appealed to US lawmakers to update stablecoin regulations, allowing users to earn interest on their stablecoin assets.
Armstrong's Arguments
Armstrong highlights the importance of paying interest on reserve assets backing stablecoins directly to users. He believes that this could turn stablecoins into interest-bearing accounts, but outdated regulations currently prevent this.
Current Limitations
Armstrong’s comments highlight a key limitation in the US regulatory framework, where stablecoin issuers are generally restricted from distributing interest to holders. Stablecoins like USDC and USDT are backed by low-risk assets such as US Treasury bonds, but the interest earned from reserves usually benefits issuers, not users.
Potential Changes and Implications
Armstrong suggests that allowing stablecoin holders to earn interest could be a major breakthrough for the industry and make stablecoins more competitive with traditional banking products. This could redefine the role of digital dollars in finance and enhance the integration of cryptocurrency into the mainstream economy. While stablecoin legislation in Europe and Asia has been progressing, the US remains in a legal gray area.
The introduction of interest-bearing stablecoins in the US could lead to significant changes in financial systems and strengthen the position of cryptocurrencies in the global market.
