Coinbase CEO Brian Armstrong Calls on Lawmakers to Support Stablecoin Legislation

Coinbase CEO Brian Armstrong has called on lawmakers to support stablecoin legislation that allows consumers to earn interest directly from their digital dollar holdings

Coinbase CEO Brian Armstrong has urged lawmakers to support stablecoin legislation that allows consumers to earn interest directly from their digital dollar holdings, presenting it as a "win-win" scenario.

In a detailed post published on March 31, Armstrong argued that the next phase of stablecoin innovation must include "onchain interest." This would involve a mechanism for distributing a share of the yield generated by underlying reserve assets, such as short-term US Treasuries, to the holders of fiat-backed stablecoins.

While banks have long been granted regulatory exemptions to offer interest-bearing accounts, stablecoin issuers currently face legal uncertainty. They cannot share interest with users without potentially triggering securities laws or engaging in activities that may be classified as "investment banking."

According to Armstrong:

“Consumers deserve a bigger piece of the pie. Opening the door for onchain interest will force us all to up our game for the ultimate benefit of consumers, and will keep this innovation onshore.”

Fairer financial future

Stablecoins have already achieved significant adoption as a digital representation of fiat currencies, but Armstrong maintained that they haven't yet unlocked their full potential for everyday users.

He pointed out that while the average Federal Funds rate in 2024 was 4.75%, most consumers were earning less than 0.5%—and in many cases as little as 0.01%—on their savings accounts. With inflation running at nearly 3%, this resulted in a real loss of purchasing power for ordinary Americans.

As Armstrong noted:

“Onchain interest democratizes access to market-rate yields, giving regular people a fair shot at maintaining and growing their wealth.”

He further highlighted the potential of stablecoins to transform financial access on a global scale. Billions of people in underbanked regions around the world lack complete access to the US dollar or are forced to use local currencies subject to rapid depreciation and instability.

By enabling interest-bearing stablecoins, the US could rapidly onboard a new wave of global users into an instant, transparent, and accessible financial system that only requires an internet connection.

As Armstrong added:

“No branch visits, no excessive overdraft or remittance fees. It’s equal financial access for everyone, powered by crypto rails.”

Strategic advantage for the US economy

Armstrong went on to detail how permitting onchain interest for stablecoins also aligns with broader US economic policy goals.

Stablecoin issuers are already among the largest buyers of US Treasuries, exceeding the purchases made by many foreign governments, and they are helping to redirect more global capital demand toward dollar-denominated assets.

If consumers around the world could earn interest on US stablecoins, the ensuing increase in adoption would in turn boost Treasury demand, strengthen the dollar's role in the global financial system, and stimulate economic activity through higher consumer spending and investment.

According to Armstrong:

“More yield in consumers’ hands means more spending, saving, investing—fueling economic growth in all local economies where stablecoins are held.”

However, Armstrong cautioned that without swift action from Congress to integrate onchain interest into new stablecoin legislation, the US could miss out on trillions of dollars in global financial flows over the coming decades.

He urged lawmakers to quickly add clear legal provisions to ensure that regulated issuers of fiat-backed stablecoins can distribute interest to users without triggering complex disclosure requirements or classifications that may subject issuers to an overlapping set of securities laws.

As Armstrong concluded:

“With a pro-crypto administration and Congress actively working on stablecoin regulation, we have a unique opportunity. We can either modernize the system to benefit consumers—or protect an outdated one that enriches middlemen.”

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