Coinbase Warns US Risks Falling Behind China if Stablecoin Interest Is Banned
Coinbase Chief Policy Officer Faryar Shirzad warned in March 2025 that the United States risks losing ground to China in the digital finance race if policymakers prohibit or restrict interest payments on stablecoins. China’s central bank has introduced guidelines allowing interest on digital yuan wallets, positioning the digital yuan as a programmable, interest-bearing CBDC with advantages for adoption, monetary policy transmission, financial inclusion and cross‑border settlement. In the U.S., the CLARITY Act and other legislative efforts remain unresolved and are silent on interest provisions for stablecoins, creating regulatory uncertainty. Experts cited include Georgetown fintech researcher Dr. Sarah Johnson, who noted that interest-bearing digital currencies open new monetary policy channels. Market implications discussed include potential challenges to dollar dominance, bank disintermediation, altered savings behavior, and varying consumer‑protection needs. Coinbase’s message frames stablecoin interest policy as a strategic inflection point that could shape international payment systems and U.S. financial innovation depending on Congressional action in the coming months.
Neutral
The news is primarily regulatory and strategic rather than an immediate market-moving event for specific crypto prices. Coinbase’s warning underscores regulatory risk and potential long-term competitive shifts: if the U.S. delays allowing interest on stablecoins, adoption and innovation could shift offshore, which is structurally negative for some U.S.-based stablecoin issuers and dollar-centric payment rails. Conversely, clarity or permissive policy would support on‑shore stablecoin products and could be bullish for stablecoin-related volumes and fiat on/off ramps. Short-term market effects are likely muted — traders often react to concrete rule changes, enforcement actions, or major product launches rather than commentary. Longer-term, divergence between China’s interest-bearing digital yuan and U.S. policy could influence capital flows, banking deposit dynamics and stablecoin demand, increasing volatility around regulatory milestones (e.g., CLARITY Act votes). Historical parallels: regulatory ambiguity around stablecoin regulation in 2021–2023 depressed institutional stablecoin product rollouts and increased volatility; by contrast, clear approvals (such as later stablecoin charters or clearer OCC guidance) have supported institutional adoption. Therefore the immediate classification is neutral, but the story raises medium- to long-term bearish structural risk for U.S. incumbents if policymakers remain inactive, and bullish potential if reform provides clarity and permissive frameworks.