Coinbase CEO Brian Armstrong is urging U.S. lawmakers to update stablecoin legislation to allow for a new financial feature he calls “onchain interest”, the ability for stablecoin holders to earn yield directly on their assets.
In a March 31 post on X, Armstrong argued that crypto firms should be allowed and incentivized to pay interest to stablecoin holders, much like traditional banks offer interest-bearing savings accounts.
“This is consistent with a free market approach,” he wrote.
Armstrong’s comments come as lawmakers continue to deliberate between two competing pieces of federal legislation:
- The Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act
- The Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act
Neither bill, in its current form, permits interest-bearing stablecoins. In fact, the STABLE Act includes language that explicitly prohibits yield payments by “payment stablecoin” issuers. Meanwhile, the GENIUS Act—recently passed out of the Senate Banking Committee in an 18-6 vote—excludes interest-bearing assets from its definition of a payment stablecoin altogether.
Why Onchain Interest Matters: A Digital Dollar with a Real Yield
He pointed out that stablecoins have already proven their utility by digitizing fiat currencies like the U.S. dollar, but the next step is enabling yield generation to mirror, and potentially exceed, traditional banking offerings.
He estimates that U.S. consumers could earn around 4% annually on stablecoin holdings, nearly 10 times higher than the 2024 average savings yield of 0.41%.
The benefits, he argues, extend well beyond the individual saver. Armstrong believes onchain interest could:
- Drive adoption of U.S. dollar-backed stablecoins globally
- Pull capital back into U.S. Treasuries, reinforcing dollar dominance
- Stimulate local economies, as higher yields encourage more spending, saving, and investing
“More yield in consumers’ hands means more spending, saving, investing, fueling economic growth in all local economies where stablecoins are held,” Armstrong said.
While the STABLE and GENIUS Acts currently diverge on interest-bearing functionality, lawmakers suggest the gap isn’t insurmountable.
Representative Bryan Steil, speaking on the Crypto in America podcast, said that textual differences between the two bills could be reconciled through upcoming draft rounds in the House and Senate.
“At the end of the day, I think there’s recognition that we want to work with our Senate colleagues to get this across the line,” Steil said, hinting at a potential harmonized bill later this year.
A Test Case for Crypto Policy
Armstrong’s push for onchain interest is more than a product feature, it’s a policy test for how the U.S. will treat innovation in digital finance.
If lawmakers open the door, regulated stablecoins could emerge not just as payments tools, but as yield-generating financial instruments with global appeal. But if current restrictions hold, the U.S. risks ceding leadership in a fast-growing sector.
