A senior Coinbase executive has warned that proposed changes to the US stablecoin framework could undermine Washington’s position in the global competition for digital payments, as China steps up efforts to make its central bank digital currency more attractive.
In a post on X, Coinbase chief policy officer Faryar Shirzad said ongoing debate over whether US-issued stablecoins should be allowed to offer “rewards” under the GENIUS Act risks weakening the global competitiveness of dollar-backed stablecoins. He pointed to recent moves by China’s central bank as evidence that rival financial systems are rapidly enhancing the appeal of state-backed digital currencies.
This week, the People’s Bank of China announced plans to allow commercial banks to pay interest on balances held in digital yuan wallets starting January 1, 2026. Lu Lei, a deputy governor at the PBOC, said the change would push the e-CNY beyond its original role as a digital cash substitute and integrate it into banks’ asset and liability management.
“The digital RMB will move from the digital cash era to the digital deposit currency era,” Lei said, adding that it will support core monetary functions such as value storage and cross-border payments.
Stablecoin reward debate raises competition concerns
The GENIUS Act, passed in June, established reserve and compliance requirements for stablecoin issuers while banning the payment of direct interest. However, it allows platforms and third parties to offer rewards linked to stablecoin usage.
Shirzad cautioned that if the issue is mishandled during Senate negotiations on the broader market structure bill, it could give US rivals a significant advantage by boosting the appeal of non-US stablecoins and central bank digital currencies at a critical moment.
The warning comes amid growing concern from industry figures that bank lobbyists are seeking to reopen the GENIUS Act. Crypto policy commentator Max Avery said in a post last week that “the banking lobby now wants to reopen it.”
Avery noted that while banks earn roughly 4% on reserves held at the Federal Reserve, consumers typically receive little to no interest on traditional savings accounts. Stablecoin platforms, he argued, challenge that model by offering to pass a portion of that yield on to users.
Coinbase CEO calls GENIUS Act a “red line”
Coinbase CEO Brian Armstrong said last week that any attempt to reopen the GENIUS Act would cross a “red line.” He accused banks of lobbying Congress to restrict stablecoin rewards in order to protect their deposit base and said Coinbase would continue to oppose any effort to amend the law. Armstrong added that he was surprised by how openly the lobbying was being conducted.
He also argued that banks are misreading the situation, predicting they will eventually seek to offer interest and yield on stablecoins themselves once the opportunity becomes clearer. Armstrong described the current lobbying push as “unethical” and said it is ultimately destined to fail.
