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Coinbase Executive Flags Risk to Dollar Dominance in Stablecoin Reward Debate
Coinbase Warns US Could Lose Edge as China Plans Interest on Digital Yuan – A senior executive at Coinbase is sounding the alarm over U.S. stablecoin policy, warning that restrictive rules could hand a strategic advantage to global rivals—particularly China, which is preparing to offer interest on its central bank digital currency, the digital yuan (e-CNY).
Stablecoin Rewards at the Center of US Debate
In a post on X on Tuesday, Faryar Shirzad, Coinbase’s chief policy officer, said the debate around whether U.S. dollar stablecoins should be allowed to offer rewards under the GENIUS Act has taken on new urgency. His comments followed an announcement from China’s central bank that banks will soon be permitted to pay interest on digital yuan holdings.
“For those who misunderstand what’s at stake,” Shirzad wrote, pointing to China’s move as evidence that competition in digital money is accelerating. He argued that tokenization represents the future of finance and described the GENIUS Act as a “visionary move” designed to ensure U.S. dollar stablecoins become the primary settlement instrument of the future.
Shirzad cautioned that mishandling the issue of stablecoin rewards during Senate negotiations on market structure legislation could give non-U.S. stablecoins and foreign CBDCs a meaningful competitive edge.
China Pushes Adoption of the Digital Yuan
China’s move marks a significant shift in its CBDC strategy. Despite years of pilot programs, the e-CNY has struggled to gain widespread consumer adoption. Earlier this week, the People’s Bank of China (PBOC) announced that, starting Jan. 1, 2026, commercial banks will be allowed to pay interest on digital yuan balances.
According to PBOC Deputy Governor Lu Lei, the change will transform the e-CNY from functioning as digital cash into a form of “digital deposit currency.”
Crypto Industry vs. Banking Lobby
The GENIUS Act, passed in July, currently bars U.S. payment stablecoin issuers from paying interest directly to holders. While crypto firms argue this weakens competitiveness, banking groups support strict enforcement.
In a Dec. 18 letter, the Blockchain Association and more than 125 crypto industry participants urged Congress not to expand the ban, saying claims that stablecoin rewards threaten community banks lack evidence. The American Bankers Association, however, called for firm enforcement, warning that reward-like incentives could undermine traditional banking.
As global competition heats up, the outcome of this debate could shape the future of the U.S. dollar’s role in digital finance.
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