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Coinbase Warns US “Rewards” Ban Could Let China Win the Stablecoin Race

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Coinbase has warned {that a} renewed push in Washington to limit how stablecoins can reward customers might weaken the United States’ place in digital funds at a time when China is actively upgrading its personal state-backed digital forex to make it extra engaging.

Faryar Shirzad, Coinbase’s chief coverage officer, raised the concern in a publish on X, arguing that restrictions round rewards might cut back the attraction of dollar-backed stablecoins abroad.

He stated the concern is very delicate as rival methods transfer to make their digital currencies extra aggressive.

Shirzad pointed on to China’s newest strikes on its central financial institution digital forex, the digital yuan, for example of how briskly the world atmosphere is altering.

As China Sweetens Digital Yuan, Coinbase Questions U.S. Stablecoin Limits

Earlier this week, the People’s Bank of China unveiled a framework that may permit business banks to pay curiosity on balances held in digital yuan wallets beginning January 1, 2026.

Lu Lei, a deputy governor at the PBOC, stated the change would shift the e-CNY past its authentic position as a digital model of money and combine it into banks’ asset and legal responsibility operations.

In the United States, the dialogue is unfolding in opposition to the backdrop of the GENIUS Act, signed into law in July as the nation’s first complete stablecoin framework.

The laws set reserve and compliance requirements for issuers and barred them from paying direct curiosity whereas nonetheless permitting platforms and third events to supply rewards tied to stablecoin utilization.

Shirzad warned that adjustments throughout Senate negotiations on a broader market construction invoice might tip the steadiness additional, probably giving non-US stablecoins and CBDCs a aggressive edge.

Industry observers say stress to revisit the regulation is coming from conventional banking pursuits.

Crypto coverage commentator Max Avery said banks, which presently earn roughly 4% on reserves held at the Federal Reserve, have little incentive to see that yield shared extra broadly.

Stablecoin platforms, in contrast, have argued that passing a few of that return to customers by way of rewards is a part of what makes the merchandise engaging.

China Pushes More on Digital Yuan Growth as Private Apps Still Dominate

China continues to develop its CBDC regardless of banning cryptocurrency buying and selling and stablecoins domestically. Its newest motion plan, overlaying 2026 to 2030, seeks to broaden nationwide utilization of the digital yuan and construct out supporting infrastructure.

By November 2025, the e-CNY had processed 3.48 billion transactions price 16.7 trillion yuan, or about $2.34 trillion, throughout 230 million private wallets and practically 19 million company wallets.

The introduction of interest-bearing digital yuan wallets is broadly seen as an try to deal with long-standing complaints.

Adoption has lagged behind non-public cost platforms comparable to Alipay and WeChat Pay, which collectively control greater than 90% of China’s cellular funds market.

Users have cited a scarcity of incentives and ongoing privateness issues as causes for sticking with current apps, regardless of years of pilot packages.

The coverage has already triggered a surge in market exercise, with Chinese investors pouring more than $188 million into digital yuan-related stocks following the announcement.

At the similar time, authorities have issued warnings about scams exploiting the new curiosity characteristic, highlighting the belief points the system nonetheless faces.

Notably, the U.S. has taken a markedly totally different strategy. In January, President Donald Trump signed an government order barring federal companies from issuing or supporting a central financial institution digital forex.

The administration cited dangers to monetary stability, private privateness, and nationwide sovereignty whereas exhibiting help for privately issued, regulated stablecoins as the most well-liked digital greenback mannequin.

The publish Coinbase Warns US “Rewards” Ban Could Let China Win the Stablecoin Race appeared first on Cryptonews.

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