Coinbase CEO Defends China’s CBDC Interest Policy — But Why?
Coinbase CEO Brian Armstrong is pointing to China as a mannequin for US stablecoin coverage. The timing raises questions on his motives.
Armstrong’s protection of China’s central financial institution digital foreign money curiosity funds comes as his firm fights to protect a key income stream underneath menace from the US banking foyer. The GENIUS Act, handed final July, permits platforms like Coinbase to share yields with stablecoin holders — a provision that banking teams at the moment are pushing to get rid of.
What Armstrong Said
Armstrong took to X on January 8 to praise China’s approach to its digital foreign money. “China has determined to pay curiosity by itself stablecoin, as a result of it advantages bizarre individuals, and so they acknowledge it as a aggressive benefit,” he wrote. “I fear we’re lacking the forest by the bushes within the US.”
He argued that permitting rewards on stablecoins would profit bizarre Americans with out disrupting financial institution lending, and known as for letting “the market do each.”
The Chinese Response
But from China, the response was bemusement. Crypto analyst Phyrex pointed out a basic error in Armstrong’s framing: the digital yuan isn’t a stablecoin.
According to Phyrex, the curiosity funds should not an indication of aggressive power however a response to persistently low adoption. Yuan held in WeChat Pay and Alipay, China’s dominant cellular cost platforms, earns curiosity, whereas the digital yuan beforehand supplied none, creating little incentive for customers to modify. The curiosity program that took effect January 1 is backed by industrial banks, not the central financial institution, and charges are probably beneath customary demand deposit charges.
The GENIUS Act Battle
Armstrong’s feedback landed amid an intense lobbying warfare over US stablecoin regulation.
The GENIUS Act, handed in July 2025, prohibited stablecoin issuers from paying curiosity on to holders however allowed third-party platforms, corresponding to exchanges, to share yields by “rewards” packages. This compromise favored platforms like Coinbase.
The banking business has pushed again arduous. In November, the American Bankers Association and 52 state banking associations sent a letter to the Treasury Department urging regulators to shut this “loophole.” They argued that stablecoin platforms providing high-yield rewards might set off deposit outflows, threatening as much as $6.6 trillion in lending capability.
The lobbying continued this week. On January 7, greater than 200 group financial institution leaders sent a letter to the Senate asking lawmakers to increase the GENIUS Act’s curiosity prohibition to issuers’ associates and companions.
Armstrong fired back on December 26, calling any try and reopen the GENIUS Act a “pink line.” He criticized banks for incomes roughly 4% on reserves parked on the Federal Reserve whereas paying depositors close to zero, and accused them of “psychological gymnastics” in framing yield restrictions as security issues.
The Limits of the China Comparison
Armstrong’s invocation of China seems designed to assemble a aggressive narrative: if China is doing it, why can’t America?
The comparability invitations scrutiny. A CBDC and a non-public stablecoin are completely different devices — the digital yuan is authorized tender issued by China’s central financial institution, whereas USDC and USDT are dollar-pegged tokens from personal corporations. Critics like Phyrex argue the digital yuan’s curiosity program displays adoption struggles, not aggressive power.
But Armstrong’s broader level — that yield-sharing advantages bizarre individuals and shouldn’t be restricted — might resonate no matter whether or not his China instance holds up. The US debate finally facilities on a special query: how a lot room personal platforms ought to need to compete with banks for deposits.
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