Coinbase CEO Brian Armstrong Urges Congress to Allow Interest-Bearing Stablecoins

Coinbase CEO Brian Armstrong has called on U.S. lawmakers to ensure upcoming stablecoin legislation permits consumers to earn interest directly on their digital dollar holdings, in an article published in X on April 1, 2025 .

In a detailed Twitter post, Armstrong argued that while stablecoins have successfully digitized fiat currencies, the inability for average users to access interest generated by the underlying reserves represents a critical missed opportunity for consumers and the broader economy.

"Stablecoins like USDC are backed 1:1 by the dollar. Stablecoin issuers typically hold USD reserve assets in low risk investments like short-term US Treasuries," Armstrong explained. "Interest earned on those investments is typically kept by the issuer."

The Coinbase founder highlighted a stark disparity in the financial system, noting that while the average Federal Funds rate stood at 4.75% in 2024, consumer savings accounts yielded just 0.41% on average, with many offering as little as 0.01%.

"With inflation at ~3% last year, this means consumers had a real loss in purchasing power of 2.5% due to middlemen," Armstrong stated, adding that onchain interest could democratize access to market-rate yields.

The cryptocurrency executive outlined three major beneficiaries of enabling interest-bearing stablecoins:

American consumers would gain access to significantly higher yields on their dollar holdings, potentially exceeding 4% compared to negligible traditional savings rates.

Billions of underbanked individuals worldwide would obtain access to interest-earning U.S. dollars through a system requiring "only a simple internet connection," without branch visits or excessive fees.

The U.S. economy would benefit from stablecoins' growing role as Treasury holders—already exceeding many countries—potentially becoming "the largest treasury holder in a few years" while extending "dollar dominance in an increasingly digital global economy."

Armstrong's comments come as Congress is actively developing new stablecoin legislation under what he described as a "pro-crypto administration." He warned that failure to include provisions for onchain interest could cause the United States to miss out on "billions more USD users and trillions in potential cash flows."

The primary obstacle, according to Armstrong, is that unlike traditional banking products, stablecoins don't currently benefit from exemptions under securities laws that would allow interest payments without "onerous disclosure requirements and tax implications."

"We can choose to level the playing field and ensure these laws pave a way for all regulated stablecoins to deliver interest directly to consumers, the same way a savings or checking account can," Armstrong urged. "Or we can protect an outdated system that pays the average person 0.01% and keeps the lion's share of the interest with the middlemen."

Armstrong concluded that enabling onchain interest would foster innovation and competition while keeping these developments within U.S. jurisdiction, ultimately benefiting consumers.

Market analysts note that Armstrong's push comes amid growing competition in the stablecoin sector and increased regulatory attention to the rapidly expanding market for dollar-backed digital currencies.