- A senior executive at Coinbase advised against the USA’s continuing ban on the payment of interest or yields on US stablecoins, as China is about to implement them in its digital yuan.
The Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act is an essential milestone in the cryptocurrency industry. Its signing into law last July provides the long-awaited regulatory clarity for the digital asset ecosystem, particularly for stablecoin users and issuers in the US.
However, the industry is divided over the provisions of the law that prevent issuers of US dollar stablecoins from paying interest or yield to holders. Analysts warn that the restriction could drive capital away from regulated US markets toward offshore alternatives.
China to Allow Payment of Interest to Digital Yuan Holders
Faryar Shirzad, Chief Policy Officer at Coinbase, has recently expressed alarm over the plan of the People’s Bank of China (PBC), China’s central bank, that it will allow payment of interest to holders of the digital yuan or e-CNY, the nation’s central bank digital currency (CBDC). The new framework will take effect on January 1, 2026.
Shirzad stated that tokenization is the future and the GENIUS Act was a “visionary move” by US President Donald Trump and Congress. It also aims to ensure that US dollar stablecoins issued under US rules would be the primary settlement instrument of the future. But then again, the Coinbase senior executive highlighted that it may be time to reassess its restrictions, which the Chinese aim to capitalize for their competitive advantage.
The Coinbase official cautioned that if the Senate mishandles the negotiations on the pending market structure bill, it could hand rivals an edge in their similar offerings, including China and its CBDC. He advised lawmakers to weigh the matter carefully to protect the dominance of the US dollar in global payments and reinforce the USA’s financial system.
Digital Yuan: From Digital Cash to Digital Deposit Money
Lu Lei, Vice Governor of the PBC, confirmed the Chinese government’s decision to proceed with the next phase of the digital yuan’s roadmap through a statement at state newspaper Financial News. The central bank official said that the new framework will pave the way for the digital yuan’s transition from digital cash to a “digital deposit currency.”
As a result of the e-CNY’s transformation, the PBC will authorize commercial banks to pay interest on their clients’ digital yuan holdings starting on the implementation of the new rule.
