Coinbase CEO Brian Armstrong is calling for legislative changes in the US to allow stablecoin holders to earn “onchain interest” on their holdings.
In a March 31 post on X, Armstrong argued that crypto companies should be treated similarly to banks and be “allowed to, and incentivized to, share interest with consumers.” He added that allowing onchain interest would be “consistent with a free market approach.”
There are currently two competing pieces of federal stablecoin legislation working their way through the legislative process in the US: the Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act, and the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act.
In reference to the stablecoin legislation, Armstrong said the US had an opportunity to “level the playing field and ensure these laws pave a way for all regulated stablecoins to deliver interest directly to consumers, the same way a savings or checking account can.”
Armstrong: Onchain interest a boon for US economy
Armstrong argued that while stablecoins have already found product-market fit by “digitizing the dollar and other fiat currencies,” the addition of onchain interest would allow “the average person, and the US economy, to reap the full benefits.”
He said that if legislative changes allowed stablecoin issuers to pay interest to holders, US consumers could earn a yield of around 4% on their holdings, far outstripping the 2024 average interest yield on a consumer savings account, which Armstrong cited as 0.41%.
Armstrong also said onchain interest could benefit the broader US economy — by incentivizing the global use of US dollar stablecoins. This could see their use grow, “pulling dollars back to U.S. treasuries and extending dollar dominance in an increasingly digital global economy,” according to the Coinbase CEO.
He also argued that the potential for a higher yield than traditional savings accounts would result in “more yield in consumers’ hands means more spending, saving, investing — fueling economic growth in all local economies where stablecoins are held.”
“If we don’t unlock onchain interest, the U.S. misses out on billions more USD users and trillions in potential cash flows,” Armstrong added.
Currently, neither the STABLE Act nor the GENIUS Act gives the legal go-ahead for onchain interest-generating stablecoins. In fact, in its current form, the STABLE Act includes a short passage prohibiting “payment stablecoin” issuers from paying yield to holders:
Similarly, the GENIUS Act, which recently passed the Senate Banking Committee by a vote of 18-6, has been amended to exclude interest-bearing instruments from its definition of a “payment stablecoin.”
Commenting on the current state of the STABLE Act, Representative Bryan Steil told Eleanor Terrett, host of the Crypto in America podcast, that two pieces of legislation are positioned to “mirror up” following a few more draft rounds in the House and Senate — due to the differences between them being textual rather than substantive.
“At the end of the day, I think there’s recognition that we want to work with our Senate colleagues to get this across the line,” Steil said.
Sir Keir Starmer has backed his under-fire safeguarding minister to continue leading the government’s efforts to set up a national inquiry into grooming gangs after four survivors demanded her resignation.
The prime minister said on Thursday that Jess Phillips has “devoted vast parts of her life and career” to tackling violence against women and girls, and has “confidence in her”, despite the turmoil that has beset the process.
All four survivors who quit the government’s grooming gangs inquiry panel said they will consider returning to the process if Ms Phillips resigns.
However, five other survivors on the panel have written to Sir Keir to say they will only stay if Ms Phillips remains.
They said she had remained impartial, had listened to feedback and her previous experience to reduce violence against women and girls and her “clear passion and commitment is important to us”.
In contrast to the four who have quit, who accused Ms Phillips of trying to expand the inquiry’s scope beyond grooming gangs, the five said it needs to be widened to focus on child sexual exploitation as a whole to ensure survivors who do not fit “the generalised stereotype” are not excluded.
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In response to the demand for Ms Phillips to quit, Sir Keir said: “The safeguarding minister has huge experience in issues relating to violence against women and girls. She’s devoted vast parts of her life and career to that, and so I do have confidence in her and Louise Casey in leading this project.”
Speaking to ITV Meridian, the prime minister also sought to reassure the victims of grooming, saying: “It’s really important that the national inquiry gets to the truth. All survivors deserve answers to their questions.”
“It is very important that I say to all survivors that I give my personal assurance that this inquiry will go wherever it needs to go, the scope will not be changed.”
It is understood Downing Street has reached out to the four survivors who quit the government’s process this week.
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2:14
Starmer defended Phillips at PMQs on Wednesday
Samantha, one of the survivors who wrote the letter saying they would only stay if Ms Phillips remains, told Sky News: “We shouldn’t be falling apart right now, we should be working together.
“Jess has only ever been fair and honest with us, she’s told us as much as she possibly can within her capacity.
“She’s provided a lot of support over the phone and in-person to a lot of us survivors behind the scenes, which people don’t see about Jess.
“So I do still want her to be part of this inquiry up until the end.”
A government source told Sky News the government will be talking to all survivors on the panel about their concerns and opinions on the type of person they want to chair the inquiry, after the leading candidate dropped out following concerns from survivors over his background as a police officer.
The government will move as fast as possible, they said, but it will likely take months to appoint the right chair.
Why four survivors quit the inquiry
The four women who resigned this week expressed concerns about how the process of selecting a chair and setting the terms of reference of the national inquiry into grooming gangs is being run.
They wrote on Wednesday to Home Secretary Shabana Mahmood, calling for Ms Phillips to step down and all survivors to be consulted on appointing a senior judge as chair with no major conflicts of interest.
Ms Phillips told parliament on Tuesday that suggestions that the scope of the inquiry was to be expanded from just grooming gangs were “categorically untrue”.
But leaked consultation documents and texts between the safeguarding minister and survivor Fiona Goddard show the survivors’ concerns that the scope would be expanded were valid.
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Shadow Housing Secretary Sir James Cleverly told Sky News that he can’t see how Jess Phillips can stay in post
The survivors’ letter says: “Being publicly contradicted and dismissed by a government minister when you are a survivor telling the truth takes you right back to that feeling of not being believed all over again.
“It is a betrayal that has destroyed what little trust remained.”
They have demanded that the scope of the inquiry remain “laser-focused” on grooming gangs and called for victims to be free to speak to support networks without fear of reprisal.
Image: Fiona Goddard and Kemi Badenoch speaking during a press conference earlier this year
Pic PA
The letter to Ms Mahmood says: “Her [Ms Phillips’] conduct over the last week has shown she is unfit to oversee a process that requires survivors to trust the government. Her departure would signal you are serious about accountability and changing direction.”
The survivors describe their demands as “the absolute bare minimum for survivors to trust that this inquiry will be different from every other process that has let us down”.
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7:02
Minister for Children and Families, Josh MacAlister told Sky News Jess Phillips will not be resigning
Frontrunner quits over ‘toxicity’
The letter was sent hours after one of the frontrunners to become chair of the inquiry withdrew, blaming “vested interests” and “political opportunism and point-scoring”.
Ex-police chief and child protection specialist Jim Gamble told the home secretary in a letter there was a “highly charged and toxic environment” around the appointment process and victims “deserve better”.
The other, Annie Hudson, a former social worker, said earlier this week she no longer wanted to be considered after intense media coverage.
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‘Everyone should park their interests’
The prime minister launched the inquiry into grooming gangs after an audit by Baroness Louise Casey showed the scale of the problem.
It is understood that the government is exploring a range of other candidates and will provide an update in due course.
A Home Office spokesperson said: “The grooming gang scandal was one of the darkest moments in this country’s history.
“That is why this government is committed to a full, statutory, national inquiry to uncover the truth. It is the very least that the victims of these hideous crimes deserve.
“We are disappointed that candidates to chair that inquiry have withdrawn. This is an extremely sensitive topic, and we have to take the time to appoint the best person suitable for the role.
“The home secretary has been clear – there will be no hiding place for those who abused the most vulnerable in our society.”