Coinbase CEO Brian Armstrong pointed to China as a model for stablecoin policy in the US. The timing of this statement has led many to question his motives.
Armstrong's defense of the Chinese central bank's interest payments on digital currencies comes as his company is struggling to protect a crucial revenue stream threatened by a group of American banks. The GENIUS Act, set to pass in July 2025, allows platforms like Coinbase to Chia profits with stablecoin holders – a provision that banking groups are now lobbying to eliminate.
What did Armstrong say?
Armstrong posted on X on January 8, 2024 , praising China's approach to digital currencies. “China has chosen to pay interest on its stablecoins because it benefits ordinary people, and they see it as a competitive advantage,” he wrote. “I worry we’re focusing too much on the details and missing the bigger picture in the U.S.”
He argued that allowing yields on stablecoins would benefit American citizens without disrupting bank lending, and called for "the market to decide, doing both in parallel."
Reaction from China
However, the reaction from the Chinese side was one of confusion. Crypto analyst Physex pointed out the major misunderstanding in Armstrong's comparison: the digital yuan is not a stablecoin.
According to Physex, paying interest is not a sign of competitive strength but a solution to the problem of low user numbers. Deposits in yuan on WeChat Pay and Alipay – the two largest mobile payment platforms in China – already earn Capital , while digital yuan does not, so there is no reason for users to switch. The interest-paying program , which started on January 1, 2024, is subsidized by commercial banks, not the People's Bank of China. The interest rate is XEM lower than regular savings deposit interest rates.
The Genius Act
Armstrong's comments came at a time when the campaign for stablecoin policy in the US was at its most intense.
The GENIUS Act, passed in July 2025, prohibits stablecoin issuers from paying interest directly to holders but allows intermediary platforms, such as exchanges, to Chia profits through reward programs. This solution is considered beneficial to platforms like Coinbase.
The banking industry strongly opposed it. In November 2024, the American Bankers Association, along with 52 other state banking associations, sent a letter to the U.S. Treasury Department urging regulators to close this "loophole." They argued that high-interest stablecoin platforms could cause money to flow out of the banking system, impacting lending capacity by up to $6.6 trillion.
The campaign continued this week. On January 7, 2024, more than 200 leaders of community banks sent a letter to the U.S. Senate proposing that lawmakers expand the GENIUS Act's ban on interest payments to include partners and affiliates of stablecoin issuers.
Armstrong reacted strongly on December 26, 2024 , arguing that any proposal to reopen the GENIUS Act was a “red line.” He criticized banks for earning nearly 4% interest on Federal Reserve reserves while paying depositors almost zero. He also said banks were “putting on a show” by using safety as justification for limiting profit Chia from stablecoins.
The limitations of comparing with China.
Armstrong's mention of China as an example seems intended to build a competitive argument: If China can do it, why can't America?
However, this comparison is questioned. CBDCs and private stablecoins are two different asset classes — the digital yuan is legal tender issued by China's central bank, while USDC and USDT are USD- Peg Token issued by private companies. Critics, such as Physex, argue that the digital yuan's interest-bearing program is a "rescue" measure when user numbers are too low, rather than a genuine competitive advantage.
Nevertheless, Armstrong's main point – that profit- Chia benefits ordinary people and should not be prohibited – remains quite compelling, regardless of whether the Chinese example is accurate or not. The debate in the US ultimately boils down to the core question: how free should private platforms be to compete with banks for deposits?
