Coinbase warns that amendments to the GENIUS Act could weaken the competitiveness of USD Peg stablecoins in global payments, while China increases the appeal of its digital yuan through interest-paying mechanisms.
The People's Bank of China announced that from January 1, 2026, commercial banks will be allowed to pay interest on balances in digital yuan wallets, while the GENIUS Act in the US prohibits stablecoin issuers from paying interest directly.
- The PBOC will allow interest payments on digital yuan wallet balances starting January 1, 2026.
- The GENIUS Act prohibits stablecoin issuers from paying interest directly, only allowing rewards through the platform/third party.
- Coinbase warns that negotiations to amend the law could give China a competitive advantage.
China opens interest payment mechanism for digital yuan.
The People's Bank of China (PBOC) announced that from January 1, 2026, commercial banks can pay interest on balances in digital yuan wallets.
PBOC Vice Governor Lu Lei said this change will move the digital yuan from the digital cash stage to the digital deposit stage, thereby expanding its value-storing capacity and cross-border payment functions.
Lu Lei also mentioned the Action Plan, effective from January 1, 2026, which states that the balance in the digital RMB wallet can earn interest.
GENIUS Act and a warning from Coinbase about USD- Peg stablecoins.
Coinbase believes that amendments to the GENIUS Act by the US Congress could reduce the competitiveness of USD Peg stablecoins in global payments.
Coinbase's Chief Policy Officer, Faryar Shirzad, believes that China's increased attractiveness through interest payments on the digital yuan could be advantageous if the US mishandles negotiations on the market structure bill.
The GENIUS Act (passed in June) sets reserve and compliance regulations for stablecoins, but prohibits issuers from paying interest directly; it only allows platforms and third parties to offer rewards tied to stablecoin usage.
Coinbase CEO Brian Armstrong called any attempts to amend the GENIUS Act a red line, and accused the banking industry of lobbying to limit stablecoin rewards to protect deposits. He predicted that banks would eventually have to compete to offer interest and yields on stablecoins.
