[For QA testing] Coinbase warns on 'U.S. stablecoin policy'… “Concerned about China gaining an edge”

U.S. cryptocurrency exchange Coinbase said China could reap a windfall if the United States bans interest payments on dollar-denominated stablecoins.

Faryar Shirzad, Coinbase’s Chief Policy Officer (CPO), wrote on X on the 31st (local time) that “in the debate over whether to allow rewards (interest) on U.S.-issued stablecoins, the People’s Bank of China’s recent announcement that it will pay interest on the digital yuan is a highly timely warning.”

Earlier, the PBOC announced on the 29th that it would “allow commercial banks to pay interest on the digital yuan starting next January,” effectively granting it the same legal status as deposit money. The digital yuan is a central bank digital currency (CBDC) issued by the PBOC.

By contrast, the U.S. GENIUS Act (the stablecoin bill) prohibits stablecoin issuers from paying interest. The Blockchain Association recently sent a letter to the U.S. Congress opposing the relevant provision in the GENIUS Act.

Shirzad stressed that “if this issue is mishandled during negotiations over the crypto market structure bill (the CLARITY Act) now being discussed in the Senate, it could hand a decisive competitive advantage to non-dollar stablecoins and CBDCs.” He added that “the timing would also be the worst possible,” saying that what parties to the CLARITY Act negotiations must safeguard is “U.S. dollar and financial-system hegemony, not incumbent interests.”

Meanwhile, the American Bankers Association (ABA) argues that the GENIUS Act’s ban on stablecoin interest payments should be enforced strictly. The Block reported that “(the ABA) claims some crypto exchanges are interpreting the GENIUS Act in a way that would allow rewards-based incentives (for stablecoins), which could undermine traditional banking activities.”