Coinbase CEO calls stablecoin interest rates a ‘win-win’ for the U.S. – Why?
Senator Gillibrand cautioned that stablecoin-earning interest could make banks irrelevant.
- Armstrong hailed yield-bearing stablecoins as a ‘win-win.’
- Senator Gillibrand worried that stablecoin rewards could kill banks.
Coinbase CEO Brian Armstrong slammed critics of yield-bearing stablecoins as ongoing legislation sparks division between crypto and traditional bank supporters.
In an X (formerly Twitter) post on the 31st of March, Armstrong stated that the ‘onchain interest rate is a win-win’ for the U.S., global stablecoin users, and the U.S. government via increased demand for Treasury bills.
“U.S. stablecoin legislation should allow consumers to earn interest on stablecoins. Banks and crypto companies alike should both be allowed to, and incentivized to, share interest with consumers. This is consistent with a free market approach.”
Here, Armstrong referred to two stablecoin bills—the GENIUS and STABLE Acts.
However, his criticism was aimed at recent comments by U.S. Senator Kirsten Gillibrand, the co-sponsor of the GENIUS (Guiding and Establishing National Innovation for U.S. Stablecoins) Act.
Stablecoin vs. banks
At a D.C Blockchain Summit last week, Gillibrand stated,
“Do you want a stablecoin issuer to be able to issue interest, probably not, because if they are issuing interest, there is no reason to put your money in a local bank. If there is no reason to put your money in a local bank, who is going to give you a mortgage?”
Some market watchers perceived her comments as protection of banks at the expense of stablecoin users.
However, Armstrong criticized banks for pocketing interest rates instead of sharing them with users.
“The average FED Funds rate/market yield rate in 2024 was 4.75%, and the average consumer savings account yield was 0.41% (often 0.01%). With inflation at ~3% last year, this means consumers had a real loss in purchasing power of 2.5% due to middlemen.”
He added that consumers could earn +4% direct interest through stablecoins instead of saving accounts with 0.01%.
BitGo CEO Mike Belshe echoed Armstrong’s comments and stated,
“This is the #1 thing America could do to increase global adoption of USD. The only guys that don’t like it are the fractional reserve banks that only pay 0.2% interest!”
For his part, Mat Hougan, CEO of digital asset manager Bitwise, castigated Gillibrand’s protection of banks at the cost of average Americans. He implored,
“Wealthy individuals already have ways to opt-out of the zero-interest-cartel via money market funds and high-balance interest-bearing accounts. Wouldn’t it be nice if every American could have easy access to a way to gather interest on their money?”
The GENIUS Act was introduced in the Senate and was advanced for a wider Senate floor vote on March 13th. The STABLE Act, a similar bill by the U.S. House of Representatives, was scheduled for mark-up on the 2nd of April.
It remains uncertain if pro-crypto lawmakers will rally to update the bills to permit yield-bearing stablecoins.
That said, the stablecoin sector has gained momentum from cross-border payment players and the U.S. government.
