Coinbase CEO Brian Armstrong intensified his advocacy for interest-bearing stablecoins today, urging Congress to permit stablecoin issuers to share yield with consumers as the House Financial Services Committee prepares to vote on comprehensive stablecoin legislation. The push comes as Armstrong characterizes cryptocurrency as "the most bipartisan issue" in Washington, marking a dramatic shift from the regulatory hostility of recent years, particularly regarding stablecoin evolution.
Speaking at a Washington D.C. policy forum ahead of the committee markup, Armstrong argued that prohibiting interest payments on stablecoins creates an unfair competitive disadvantage against traditional banking products. "When consumers hold stablecoins backed by U.S. Treasuries yielding 4-5%, they should participate in those returns," Armstrong stated. "Blocking this feature only benefits incumbent banks at the expense of innovation and consumer choice."
The timing of Armstrong's advocacy coincides with Coinbase's ambitious expansion plans. The exchange recently announced its goal to become "the No. 1 financial service app in the world" within 10 years, positioning stablecoins as a cornerstone of that strategy. With over $180 billion in stablecoins circulating globally, the ability to offer yield could unlock massive adoption among retail users currently earning minimal returns in traditional savings accounts, competing directly with central bank digital currencies.
Bipartisan Momentum Building in Congress
Armstrong's characterization of crypto as Washington's "most bipartisan issue" reflects a remarkable transformation in political attitudes. The House stablecoin bill, co-sponsored by Financial Services Committee Chair Patrick McHenry (R-NC) and ranking member Maxine Waters (D-CA), represents rare bipartisan cooperation on financial regulation.
"We're seeing Democrats and Republicans unite around the idea that America needs to lead in digital currency innovation," Armstrong noted during his Capitol Hill meetings. "The question isn't whether to regulate stablecoins, but how to do it in a way that protects consumers while preserving innovation."
The proposed legislation would establish federal licensing requirements for stablecoin issuers, mandate regular audits of reserves, and create bankruptcy protections for token holders. Crucially, the current draft remains silent on interest payments, creating the opening for Armstrong's advocacy push.
Industry sources indicate that several committee members are receptive to allowing interest payments, provided issuers meet enhanced capital and disclosure requirements. Representative Ritchie Torres (D-NY) publicly supported the concept, tweeting: "If stablecoins are backed 1:1 by interest-bearing assets, consumers deserve their fair share of the yield."
Strategic Timing After Regulatory Victories
Armstrong's congressional engagement follows a series of regulatory victories for Coinbase. In February 2025, the SEC dismissed its enforcement action against the exchange, ending a two-year legal battle that cost the company over $100 million in legal fees. The dismissal, coming weeks after the change in administration, signaled a new regulatory approach to established crypto businesses.
"President Trump has breathed life into this industry," Armstrong told CNBC in March, following a White House meeting where he discussed the potential for a U.S. Bitcoin strategic reserve. The CEO's access to senior administration officials marks a dramatic reversal from the previous administration's arm's-length approach to crypto executives.
These regulatory wins have emboldened Coinbase's expansion plans. The company announced its $2.9 billion acquisition of options trading platform Deribit in May, its largest deal to date. Armstrong also confirmed plans to hire over 130 employees in Charlotte, establishing a major East Coast presence beyond its San Francisco headquarters.
The Economics of Interest-Bearing Stablecoins
The debate over stablecoin interest payments carries significant economic implications. Currently, major stablecoin issuers like Circle (USDC) and Tether (USDT) generate billions in revenue from investing reserves in Treasury bills and other low-risk assets. Tether reported $4.5 billion in profit for 2024, largely from interest on its $90 billion in reserves.
Armstrong proposes a model where issuers share a portion of this yield with token holders, similar to money market funds, enhancing the DeFi lending ecosystem. "If a stablecoin is backed by Treasuries yielding 4.5%, users could earn 3-3.5% after the issuer's operating costs," he explained. "This would make stablecoins competitive with high-yield savings accounts while maintaining full reserve backing."
Critics argue that interest payments could complicate stablecoins' regulatory treatment, potentially triggering securities laws. However, Armstrong counters that properly structured interest payments, tied directly to underlying asset yields rather than issuer profits, should avoid securities classification.
The potential market impact is substantial. Assuming $200 billion in interest-bearing stablecoins earning 3.5% annually, consumers would receive $7 billion in yearly interest payments—wealth that currently flows entirely to issuers.
Competition and Innovation Drivers
Armstrong's push for interest-bearing stablecoins also reflects competitive pressures from international markets. Singapore's largest bank, DBS, recently launched a stablecoin offering 2.5% yield to institutional clients. The European Union's Markets in Crypto-Assets (MiCA) regulation explicitly permits interest payments on e-money tokens, creating potential advantages for EU-based issuers.
"We're not asking for special treatment," Armstrong emphasized. "We're asking for American companies to compete on equal footing with global competitors who already offer these features."
The CEO also highlighted emerging blockchain innovations that make interest distribution technically seamless. Smart contracts can automatically distribute yield to millions of wallet addresses with minimal cost on Layer 2 networks. This efficiency advantage over traditional banking infrastructure could accelerate adoption if regulatory clarity emerges.
What This Means for Crypto Markets
Armstrong's stablecoin advocacy represents a broader strategy to position Coinbase at the intersection of traditional finance and crypto innovation. By pushing for interest-bearing stablecoins, the company aims to:
- Attract Mainstream Users: Yield-generating stablecoins could draw millions of traditional savers seeking better returns than bank accounts
- Increase Platform Stickiness: Users earning passive income are less likely to move funds off-platform
- Generate Fee Revenue: Coinbase could earn spreads on stablecoin yield distribution
- Support DeFi Integration: Interest-bearing stablecoins would enhance DeFi protocol sustainability
Market analysts project that regulatory approval for interest-bearing stablecoins could trigger $500 billion in new stablecoin issuance within 24 months, as yield-seeking capital migrates from traditional banking products, accelerating real-world asset tokenization.
The Road Ahead
While Armstrong expresses optimism about congressional action, significant hurdles remain. Banking industry lobbyists oppose features that would make stablecoins more competitive with traditional deposits. Some lawmakers worry about financial stability implications if stablecoins grow too large too quickly.
The House Financial Services Committee vote, expected next week, will provide the first concrete signal of congressional sentiment. Even if the House passes stablecoin legislation, Senate action remains uncertain, with Banking Committee Chair Sherrod Brown expressing skepticism about rapid stablecoin expansion.
Nevertheless, Armstrong's ability to frame stablecoins as a bipartisan economic opportunity rather than a partisan regulatory battle marks a sophisticated evolution in crypto advocacy. By focusing on consumer benefits—higher yields for savers—rather than abstract blockchain benefits, he's building a coalition that transcends traditional political divisions.
As Armstrong concluded in his congressional testimony: "American consumers deserve access to the best financial products, whether they're built by banks or blockchain companies. Interest-bearing stablecoins aren't radical—they're the natural evolution of money in the digital age."
The coming months will determine whether Congress agrees with that vision, potentially unlocking a new era of mainstream crypto adoption driven by the simple promise of earning interest on digital dollars.
Market conditions as of June 28, 2025. This article is for informational purposes only and should not be considered financial advice.