A warning has emerged that if the United States bans or restricts interest payments on stablecoins, it could fall behind China in the global digital finance race. As stablecoins evolve beyond simple payment methods into digital money infrastructure, interest payments are emerging as a key factor in determining international competitiveness.
According to The Block, Coinbase Chief Policy Officer (CPO) Faryar Shirzad recently said, “China’s decision to allow interest on its central bank digital currency (CBDC), the digital yuan, signals that the competition for digital money among countries has begun in earnest,” adding, “The U.S. can no longer delay the issue of stablecoin interest payments.”
He pointed out that if stablecoin interest payments are pushed to the back burner during negotiations for the CLARITY Act, a digital asset market structure bill currently under discussion in the US Senate, the US could lose its leadership in global digital finance. He argued that since stablecoins effectively function as dollar-denominated digital deposits, regulations that completely block interest payments could simultaneously limit user choice and innovation.
China has already taken a step forward. The People's Bank of China recently announced operational guidelines allowing interest to be paid on the balance of its central bank digital currency (CBDC) wallets. This expands the concept of the yuan beyond the traditional concept of "digital cash" to something closer to a digital deposit. This is interpreted as a strategic move to simultaneously control payment infrastructure and monetary policy.
The industry views interest payments not simply as a consumer benefit, but as a competition to establish a global standard for digital currencies. While dollar-backed stablecoins have played a key role in international payments and digital asset markets, concerns are growing that excessive regulation could weaken their usability and appeal. This gap could also lead to rapid expansion of the Asian digital currency ecosystem, centered around China.
US stablecoin policy now faces a choice between stability and competitiveness. The policy direction surrounding interest payments is expected to go beyond a simple regulatory debate and become a watershed moment that will determine the future leadership of the global digital money order.
