Stablecoin Interest Ban Leaves U.S. Lagging Behind China
Coinbase’s Chief Policy Officer, Faryar Shirzad, told U.S. lawmakers that proposals to cap or ban yields on U.S.-issued stablecoins risk handing China a significant competitive edge. Shirzad argued that strict limits on interest would stifle domestic innovation, reduce onshore liquidity, and encourage market participants to migrate to platforms or jurisdictions with more permissive rules.
The warning highlights a core policy trade-off: protecting retail investors versus preserving the U.S. role in the global crypto ecosystem. If yields are tightly restricted, stablecoin issuance and related financial activity could concentrate in jurisdictions that accept yield-bearing products, altering market flows and weakening U.S. influence over stablecoin standards. Lawmakers will need to balance consumer safeguards with the economic and geopolitical consequences of pushing capital and technical development abroad.